Correlation Between HDFC Bank and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both HDFC Bank and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance, you can compare the effects of market volatilities on HDFC Bank and Credit Acceptance 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 Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Credit Acceptance.
Diversification Opportunities for HDFC Bank and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HDFC and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance 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 Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of HDFC Bank i.e., HDFC Bank and Credit Acceptance go up and down completely randomly.
Pair Corralation between HDFC Bank and Credit Acceptance
Assuming the 90 days trading horizon HDFC Bank is expected to generate 2.02 times less return on investment than Credit Acceptance. In addition to that, HDFC Bank is 2.07 times more volatile than Credit Acceptance. It trades about 0.01 of its total potential returns per unit of risk. Credit Acceptance is currently generating about 0.06 per unit of volatility. If you would invest 23,200 in Credit Acceptance on November 28, 2024 and sell it today you would earn a total of 9,300 from holding Credit Acceptance or generate 40.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
HDFC Bank Limited vs. Credit Acceptance
Performance |
| Timeline |
| HDFC Bank Limited |
| Credit Acceptance |
HDFC Bank and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Credit Acceptance
The main advantage of trading using opposite HDFC Bank and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| HDFC Bank vs. Global X Funds | HDFC Bank vs. Telecomunicaes Brasileiras SA | HDFC Bank vs. GP Investments | HDFC Bank vs. Guidewire Software, |
| Credit Acceptance vs. United Rentals | Credit Acceptance vs. Verizon Communications | Credit Acceptance vs. Brpr Corporate Offices | Credit Acceptance vs. Charter Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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