Correlation Between HDFC Asset and Salzer Electronics

Can any of the company-specific risk be diversified away by investing in both HDFC Asset and Salzer Electronics 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 Salzer Electronics 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 Salzer Electronics Limited, you can compare the effects of market volatilities on HDFC Asset and Salzer Electronics 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 Salzer Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Asset and Salzer Electronics.

Diversification Opportunities for HDFC Asset and Salzer Electronics

-0.58

Correlation Coefficient

HDFC Asset  Salzer Electronics

Excellent diversification

The 3 months correlation between HDFC and Salzer is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Asset Management and Salzer Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzer Electronics 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 Salzer Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzer Electronics has no effect on the direction of HDFC Asset i.e., HDFC Asset and Salzer Electronics go up and down completely randomly.

Pair Corralation between HDFC Asset and Salzer Electronics

Assuming the 90 days trading horizon HDFC Asset Management is expected to generate 0.62 times more return on investment than Salzer Electronics. However, HDFC Asset Management is 1.62 times less risky than Salzer Electronics. It trades about 0.21 of its potential returns per unit of risk. Salzer Electronics Limited is currently generating about -0.1 per unit of risk. If you would invest  446,363  in HDFC Asset Management on April 24, 2025 and sell it today you would earn a total of  112,887  from holding HDFC Asset Management or generate 25.29% 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.  Salzer Electronics 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 16 (%) 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.

Salzer Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salzer Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HDFC Asset and Salzer Electronics

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

The idea behind HDFC Asset Management and Salzer Electronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.