Correlation Between Computer Age and HDFC Asset

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

By analyzing existing cross correlation between Computer Age Management and HDFC Asset Management, you can compare the effects of market volatilities on Computer Age 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 Computer Age with a short position of HDFC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Age and HDFC Asset.

Diversification Opportunities for Computer Age and HDFC Asset

0.79

Correlation Coefficient

Computer Age  HDFC Asset

Poor diversification

The 3 months correlation between Computer and HDFC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Computer Age Management 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 Computer Age 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 Computer Age Management 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 Computer Age i.e., Computer Age and HDFC Asset go up and down completely randomly.

Pair Corralation between Computer Age and HDFC Asset

Assuming the 90 days trading horizon Computer Age is expected to generate 15.08 times less return on investment than HDFC Asset. But when comparing it to its historical volatility, Computer Age Management is 1.07 times less risky than HDFC Asset. It trades about 0.03 of its potential returns per unit of risk. HDFC Asset Management is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  493,850  in HDFC Asset Management on April 22, 2025 and sell it today you would earn a total of  65,150  from holding HDFC Asset Management or generate 13.19% return on investment over 90 days.

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

Computer Age Management  vs.  HDFC Asset Management

Computer Age Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in August 2025.

HDFC Asset Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Asset Management are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HDFC Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer Age and HDFC Asset

The main advantage of trading using opposite Computer Age and HDFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Age 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 Computer Age Management 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..