Correlation Between Consolidated Construction and HDFC Life

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

By analyzing existing cross correlation between Consolidated Construction Consortium and HDFC Life Insurance, you can compare the effects of market volatilities on Consolidated Construction and HDFC Life 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 Consolidated Construction with a short position of HDFC Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and HDFC Life.

Diversification Opportunities for Consolidated Construction and HDFC Life

0.77

Correlation Coefficient

Consolidated Construction  HDFC Life

Poor diversification

The 3 months correlation between Consolidated and HDFC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and HDFC Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Life Insurance and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with HDFC Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Life Insurance has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and HDFC Life go up and down completely randomly.

Pair Corralation between Consolidated Construction and HDFC Life

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 2.84 times more return on investment than HDFC Life. However, Consolidated Construction is 2.84 times more volatile than HDFC Life Insurance. It trades about 0.08 of its potential returns per unit of risk. HDFC Life Insurance is currently generating about 0.1 per unit of risk. If you would invest  1,478  in Consolidated Construction Consortium on April 24, 2025 and sell it today you would earn a total of  222.00  from holding Consolidated Construction Consortium or generate 15.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Consolidated Construction Cons  vs.  HDFC Life Insurance

Consolidated Construction

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Construction Consortium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Consolidated Construction unveiled solid returns over the last few months and may actually be approaching a breakup point.

HDFC Life Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Life Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, HDFC Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Consolidated Construction and HDFC Life

The main advantage of trading using opposite Consolidated Construction and HDFC Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, HDFC Life 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 Life will offset losses from the drop in HDFC Life's long position.

The idea behind Consolidated Construction Consortium and HDFC Life Insurance 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.