Correlation Between Tamilnad Mercantile and HDFC Asset

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Tamilnad Mercantile and HDFC Asset 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 Tamilnad Mercantile and HDFC Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamilnad Mercantile Bank and HDFC Asset Management, you can compare the effects of market volatilities on Tamilnad Mercantile and HDFC Asset 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 Tamilnad Mercantile with a short position of HDFC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamilnad Mercantile and HDFC Asset.

Diversification Opportunities for Tamilnad Mercantile and HDFC Asset

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Tamilnad and HDFC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tamilnad Mercantile Bank and HDFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Asset Management and Tamilnad Mercantile 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 Tamilnad Mercantile Bank are associated (or correlated) with HDFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Asset Management has no effect on the direction of Tamilnad Mercantile i.e., Tamilnad Mercantile and HDFC Asset go up and down completely randomly.

Pair Corralation between Tamilnad Mercantile and HDFC Asset

Assuming the 90 days trading horizon Tamilnad Mercantile Bank is expected to generate 0.85 times more return on investment than HDFC Asset. However, Tamilnad Mercantile Bank is 1.18 times less risky than HDFC Asset. It trades about 0.45 of its potential returns per unit of risk. HDFC Asset Management is currently generating about 0.11 per unit of risk. If you would invest  44,015  in Tamilnad Mercantile Bank on September 13, 2024 and sell it today you would earn a total of  5,865  from holding Tamilnad Mercantile Bank or generate 13.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Tamilnad Mercantile Bank  vs.  HDFC Asset Management

 Performance 
       Timeline  
Tamilnad Mercantile Bank 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Tamilnad Mercantile Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Tamilnad Mercantile may actually be approaching a critical reversion point that can send shares even higher in January 2025.
HDFC Asset Management 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Asset Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, HDFC Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tamilnad Mercantile and HDFC Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tamilnad Mercantile and HDFC Asset

The main advantage of trading using opposite Tamilnad Mercantile and HDFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamilnad Mercantile position performs unexpectedly, HDFC Asset 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 Asset will offset losses from the drop in HDFC Asset's long position.
The idea behind Tamilnad Mercantile Bank and HDFC Asset Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Commodity Directory
Find actively traded commodities issued by global exchanges
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities