Correlation Between HDFC Asset and Hexa Tradex

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

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

Diversification Opportunities for HDFC Asset and Hexa Tradex

-0.48

Correlation Coefficient

HDFC Asset  Hexa Tradex

Very good diversification

The 3 months correlation between HDFC and Hexa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Asset Management and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited and HDFC Asset 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 Asset Management are associated (or correlated) with Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of HDFC Asset i.e., HDFC Asset and Hexa Tradex go up and down completely randomly.

Pair Corralation between HDFC Asset and Hexa Tradex

Assuming the 90 days trading horizon HDFC Asset Management is expected to generate 1.08 times more return on investment than Hexa Tradex. However, HDFC Asset is 1.08 times more volatile than Hexa Tradex Limited. It trades about 0.22 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about -0.09 per unit of risk. If you would invest  442,653  in HDFC Asset Management on April 22, 2025 and sell it today you would earn a total of  116,347  from holding HDFC Asset Management or generate 26.28% return on investment over 90 days.

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

HDFC Asset Management  vs.  Hexa Tradex Limited

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.

Hexa Tradex Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with HDFC Asset and Hexa Tradex

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

The idea behind HDFC Asset Management and Hexa Tradex 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.