Correlation Between HDFC Bank and Multi Commodity

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

Diversification Opportunities for HDFC Bank and Multi Commodity

0.85

Correlation Coefficient

HDFC Bank  Multi Commodity

Very poor diversification

The 3 months correlation between HDFC and Multi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Multi Commodity Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Commodity Exchange 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 Multi Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Commodity Exchange has no effect on the direction of HDFC Bank i.e., HDFC Bank and Multi Commodity go up and down completely randomly.

Pair Corralation between HDFC Bank and Multi Commodity

Assuming the 90 days trading horizon HDFC Bank is expected to generate 11.64 times less return on investment than Multi Commodity. But when comparing it to its historical volatility, HDFC Bank Limited is 2.47 times less risky than Multi Commodity. It trades about 0.05 of its potential returns per unit of risk. Multi Commodity Exchange is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  595,000  in Multi Commodity Exchange on April 21, 2025 and sell it today you would earn a total of  228,500  from holding Multi Commodity Exchange or generate 38.4% return on investment over 90 days.

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

HDFC Bank Limited  vs.  Multi Commodity Exchange

HDFC Bank Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HDFC Bank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Multi Commodity Exchange

Risk-Adjusted Performance

Solid

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

Pair Trading with HDFC Bank and Multi Commodity

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

The idea behind HDFC Bank Limited and Multi Commodity Exchange 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.