Correlation Between HDFC Bank and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both HDFC Bank and Metalurgica Gerdau 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA, you can compare the effects of market volatilities on HDFC Bank and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Metalurgica Gerdau.
Diversification Opportunities for HDFC Bank and Metalurgica Gerdau
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between HDFC and Metalurgica is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of HDFC Bank i.e., HDFC Bank and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between HDFC Bank and Metalurgica Gerdau
Assuming the 90 days trading horizon HDFC Bank is expected to generate 3.14 times less return on investment than Metalurgica Gerdau. In addition to that, HDFC Bank is 1.71 times more volatile than Metalurgica Gerdau SA. It trades about 0.04 of its total potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.21 per unit of volatility. If you would invest 994.00 in Metalurgica Gerdau SA on August 26, 2024 and sell it today you would earn a total of 102.00 from holding Metalurgica Gerdau SA or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HDFC Bank Limited vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| HDFC Bank Limited |
| Metalurgica Gerdau |
HDFC Bank and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Metalurgica Gerdau
The main advantage of trading using opposite HDFC Bank and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| HDFC Bank vs. Fras le SA | HDFC Bank vs. Clave Indices De | HDFC Bank vs. BTG Pactual Logstica | HDFC Bank vs. Telefonaktiebolaget LM Ericsson |
| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Fras le SA | Metalurgica Gerdau vs. Clave Indices De | Metalurgica Gerdau vs. BTG Pactual Logstica |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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