Correlation Between Merchant Bank and HDFC Bank
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By analyzing existing cross correlation between Merchant Bank of and HDFC Bank of, you can compare the effects of market volatilities on Merchant Bank and HDFC Bank 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 Merchant Bank with a short position of HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchant Bank and HDFC Bank.
Diversification Opportunities for Merchant Bank and HDFC Bank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merchant and HDFC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Merchant Bank of and HDFC Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank and Merchant 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 Merchant Bank of are associated (or correlated) with HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank has no effect on the direction of Merchant Bank i.e., Merchant Bank and HDFC Bank go up and down completely randomly.
Pair Corralation between Merchant Bank and HDFC Bank
Assuming the 90 days trading horizon Merchant Bank of is expected to under-perform the HDFC Bank. In addition to that, Merchant Bank is 2.53 times more volatile than HDFC Bank of. It trades about -0.16 of its total potential returns per unit of risk. HDFC Bank of is currently generating about -0.09 per unit of volatility. If you would invest 3,500 in HDFC Bank of on August 28, 2024 and sell it today you would lose (70.00) from holding HDFC Bank of or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Merchant Bank of vs. HDFC Bank of
Performance |
| Timeline |
| Merchant Bank |
| HDFC Bank |
Merchant Bank and HDFC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchant Bank and HDFC Bank
The main advantage of trading using opposite Merchant Bank and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchant Bank position performs unexpectedly, HDFC Bank 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 HDFC Bank will offset losses from the drop in HDFC Bank's long position.| Merchant Bank vs. Hotel Sigiriya PLC | Merchant Bank vs. SERENDIB HOTELS PLC | Merchant Bank vs. Singhe Hospitals | Merchant Bank vs. Pegasus Hotels of |
| HDFC Bank vs. ACL Plastics PLC | HDFC Bank vs. HVA Foods PLC | HDFC Bank vs. Ceylon Guardian Investment | HDFC Bank vs. Union Chemicals Lanka |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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