Correlation Between American Express and Hdfc Bank

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

Diversification Opportunities for American Express and Hdfc Bank

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between American and Hdfc Bank is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hdfc Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hdfc Bank and American Express 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 American Express 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 American Express i.e., American Express and Hdfc Bank go up and down completely randomly.

Pair Corralation between American Express and Hdfc Bank

Considering the 90-day investment horizon American Express is expected to generate 4.43 times less return on investment than Hdfc Bank. In addition to that, American Express is 1.05 times more volatile than Hdfc Bank. It trades about 0.04 of its total potential returns per unit of risk. Hdfc Bank is currently generating about 0.17 per unit of volatility. If you would invest  5,537  in Hdfc Bank on May 11, 2022 and sell it today you would earn a total of  770.00  from holding Hdfc Bank or generate 13.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Hdfc Bank Ltd

 Performance (%) 
       Timeline  
American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Hdfc Bank 
Hdfc Bank Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hdfc Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Hdfc Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Hdfc Bank Price Channel

American Express and Hdfc Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Hdfc Bank

The main advantage of trading using opposite American Express and Hdfc Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.
The idea behind American Express and Hdfc Bank 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.

Hdfc Bank

Pair trading matchups for Hdfc Bank

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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