Correlation Between HDFC Bank and ASML Holding
Can any of the company-specific risk be diversified away by investing in both HDFC Bank and ASML Holding 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 ASML Holding 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 ASML Holding NV, you can compare the effects of market volatilities on HDFC Bank and ASML Holding 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 ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and ASML Holding.
Diversification Opportunities for HDFC Bank and ASML Holding
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HDFC and ASML is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of HDFC Bank i.e., HDFC Bank and ASML Holding go up and down completely randomly.
Pair Corralation between HDFC Bank and ASML Holding
Assuming the 90 days trading horizon HDFC Bank is expected to generate 1.8 times less return on investment than ASML Holding. In addition to that, HDFC Bank is 1.02 times more volatile than ASML Holding NV. It trades about 0.02 of its total potential returns per unit of risk. ASML Holding NV is currently generating about 0.03 per unit of volatility. If you would invest 5,651 in ASML Holding NV on August 23, 2024 and sell it today you would earn a total of 1,412 from holding ASML Holding NV or generate 24.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
HDFC Bank Limited vs. ASML Holding NV
Performance |
| Timeline |
| HDFC Bank Limited |
| ASML Holding NV |
HDFC Bank and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and ASML Holding
The main advantage of trading using opposite HDFC Bank and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.| HDFC Bank vs. Ita Unibanco Holding | HDFC Bank vs. Ita Unibanco Holding | HDFC Bank vs. Banco Bradesco SA | HDFC Bank vs. Itasa Investimentos |
| ASML Holding vs. Fidelity National Information | ASML Holding vs. TAL Education Group | ASML Holding vs. Global X Funds | ASML Holding vs. MAHLE Metal Leve |
Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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