Correlation Between CITIC Telecom and HDFC Bank

Can any of the company-specific risk be diversified away by investing in both CITIC Telecom 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 CITIC Telecom and HDFC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITIC Telecom International and HDFC Bank Limited, you can compare the effects of market volatilities on CITIC Telecom 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 CITIC Telecom with a short position of HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and HDFC Bank.

Diversification Opportunities for CITIC Telecom and HDFC Bank

0.53

Correlation Coefficient

CITIC Telecom  HDFC Bank

Very weak diversification

The 3 months correlation between CITIC and HDFC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited and CITIC Telecom 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 CITIC Telecom International 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 Limited has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and HDFC Bank go up and down completely randomly.

Pair Corralation between CITIC Telecom and HDFC Bank

Assuming the 90 days horizon CITIC Telecom International is expected to generate 2.16 times more return on investment than HDFC Bank. However, CITIC Telecom is 2.16 times more volatile than HDFC Bank Limited. It trades about 0.09 of its potential returns per unit of risk. HDFC Bank Limited is currently generating about 0.04 per unit of risk. If you would invest  23.00  in CITIC Telecom International on April 21, 2025 and sell it today you would earn a total of  4.00  from holding CITIC Telecom International or generate 17.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CITIC Telecom International  vs.  HDFC Bank Limited

CITIC Telecom Intern

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

HDFC Bank Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, HDFC Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CITIC Telecom and HDFC Bank

The main advantage of trading using opposite CITIC Telecom and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom 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 CITIC Telecom International and HDFC Bank Limited 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.