Correlation Between Hybrid Financial and Bharti Airtel

Can any of the company-specific risk be diversified away by investing in both Hybrid Financial and Bharti Airtel 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 Hybrid Financial and Bharti Airtel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hybrid Financial Services and Bharti Airtel Limited, you can compare the effects of market volatilities on Hybrid Financial and Bharti Airtel 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 Hybrid Financial with a short position of Bharti Airtel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hybrid Financial and Bharti Airtel.

Diversification Opportunities for Hybrid Financial and Bharti Airtel

-0.54

Correlation Coefficient

Hybrid Financial  Bharti Airtel

Excellent diversification

The 3 months correlation between Hybrid and Bharti is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hybrid Financial Services and Bharti Airtel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bharti Airtel Limited and Hybrid Financial 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 Hybrid Financial Services are associated (or correlated) with Bharti Airtel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bharti Airtel Limited has no effect on the direction of Hybrid Financial i.e., Hybrid Financial and Bharti Airtel go up and down completely randomly.

Pair Corralation between Hybrid Financial and Bharti Airtel

Assuming the 90 days trading horizon Hybrid Financial Services is expected to under-perform the Bharti Airtel. In addition to that, Hybrid Financial is 2.01 times more volatile than Bharti Airtel Limited. It trades about -0.07 of its total potential returns per unit of risk. Bharti Airtel Limited is currently generating about 0.05 per unit of volatility. If you would invest  157,135  in Bharti Airtel Limited on September 2, 2024 and sell it today you would earn a total of  5,580  from holding Bharti Airtel Limited or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hybrid Financial Services  vs.  Bharti Airtel Limited

Hybrid Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hybrid Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bharti Airtel Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bharti Airtel Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hybrid Financial and Bharti Airtel

The main advantage of trading using opposite Hybrid Financial and Bharti Airtel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hybrid Financial position performs unexpectedly, Bharti Airtel 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 Bharti Airtel will offset losses from the drop in Bharti Airtel's long position.

The idea behind Hybrid Financial Services and Bharti Airtel Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.