Correlation Between HDFC Bank and Gen Digital

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

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

Diversification Opportunities for HDFC Bank and Gen Digital

-0.74

Correlation Coefficient

HDFC Bank  Gen Digital

Pay attention - limited upside

The 3 months correlation between HDFC and Gen is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital and HDFC Bank 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 HDFC Bank Limited are associated (or correlated) with Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of HDFC Bank i.e., HDFC Bank and Gen Digital go up and down completely randomly.

Pair Corralation between HDFC Bank and Gen Digital

Assuming the 90 days trading horizon HDFC Bank Limited is expected to generate 0.52 times more return on investment than Gen Digital. However, HDFC Bank Limited is 1.92 times less risky than Gen Digital. It trades about 0.12 of its potential returns per unit of risk. Gen Digital is currently generating about -0.05 per unit of risk. If you would invest  7,640  in HDFC Bank Limited on April 9, 2025 and sell it today you would earn a total of  561.00  from holding HDFC Bank Limited or generate 7.34% return on investment over 90 days.

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

HDFC Bank Limited  vs.  Gen Digital

HDFC Bank Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, HDFC Bank may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gen Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HDFC Bank and Gen Digital

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

The idea behind HDFC Bank Limited and Gen Digital 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.