Correlation Between HDFC Bank and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both HDFC Bank and Omega Healthcare 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 Omega Healthcare 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 Omega Healthcare Investors,, you can compare the effects of market volatilities on HDFC Bank and Omega Healthcare 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 Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Omega Healthcare.
Diversification Opportunities for HDFC Bank and Omega Healthcare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HDFC and Omega is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Omega Healthcare Investors, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of HDFC Bank i.e., HDFC Bank and Omega Healthcare go up and down completely randomly.
Pair Corralation between HDFC Bank and Omega Healthcare
Assuming the 90 days trading horizon HDFC Bank is expected to generate 3.56 times less return on investment than Omega Healthcare. In addition to that, HDFC Bank is 1.17 times more volatile than Omega Healthcare Investors,. It trades about 0.01 of its total potential returns per unit of risk. Omega Healthcare Investors, is currently generating about 0.06 per unit of volatility. If you would invest 4,301 in Omega Healthcare Investors, on October 11, 2024 and sell it today you would earn a total of 3,249 from holding Omega Healthcare Investors, or generate 75.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HDFC Bank Limited vs. Omega Healthcare Investors,
Performance |
| Timeline |
| HDFC Bank Limited |
| Omega Healthcare Inv |
HDFC Bank and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Omega Healthcare
The main advantage of trading using opposite HDFC Bank and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.| HDFC Bank vs. JB Hunt Transport | HDFC Bank vs. Metalrgica Riosulense SA | HDFC Bank vs. UnitedHealth Group Incorporated | HDFC Bank vs. Hospital Mater Dei |
| Omega Healthcare vs. Zoom Video Communications | Omega Healthcare vs. Fresenius Medical Care | Omega Healthcare vs. T Mobile | Omega Healthcare 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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