Correlation Between HDFC Bank and Apollo Bancorp

Can any of the company-specific risk be diversified away by investing in both HDFC Bank and Apollo Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HDFC Bank and Apollo Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HDFC Bank Limited and Apollo Bancorp, you can compare the effects of market volatilities on HDFC Bank and Apollo Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HDFC Bank with a short position of Apollo Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Apollo Bancorp.

Diversification Opportunities for HDFC Bank and Apollo Bancorp

-0.5

Correlation Coefficient

HDFC Bank  Apollo Bancorp

Very good diversification

The 3 months correlation between HDFC and Apollo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp and HDFC Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HDFC Bank Limited are associated (or correlated) with Apollo Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Bancorp has no effect on the direction of HDFC Bank i.e., HDFC Bank and Apollo Bancorp go up and down completely randomly.

Pair Corralation between HDFC Bank and Apollo Bancorp

Considering the 90-day investment horizon HDFC Bank Limited is expected to generate 1.01 times more return on investment than Apollo Bancorp. However, HDFC Bank is 1.01 times more volatile than Apollo Bancorp. It trades about 0.02 of its potential returns per unit of risk. Apollo Bancorp is currently generating about 0.0 per unit of risk. If you would invest  6,537  in HDFC Bank Limited on September 13, 2024 and sell it today you would earn a total of  206.00  from holding HDFC Bank Limited or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	65.32%
Values	Daily Returns

HDFC Bank Limited  vs.  Apollo Bancorp

HDFC Bank Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, HDFC Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apollo Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HDFC Bank and Apollo Bancorp

The main advantage of trading using opposite HDFC Bank and Apollo Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, Apollo Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Apollo Bancorp will offset losses from the drop in Apollo Bancorp's long position.

The idea behind HDFC Bank Limited and Apollo Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.