Correlation Between HDFC Life and Patanjali Foods

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

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

Diversification Opportunities for HDFC Life and Patanjali Foods

-0.79

Correlation Coefficient

HDFC Life  Patanjali Foods

Pay attention - limited upside

The 3 months correlation between HDFC and Patanjali is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Life Insurance and Patanjali Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patanjali Foods and HDFC Life 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 Life Insurance are associated (or correlated) with Patanjali Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patanjali Foods has no effect on the direction of HDFC Life i.e., HDFC Life and Patanjali Foods go up and down completely randomly.

Pair Corralation between HDFC Life and Patanjali Foods

Assuming the 90 days trading horizon HDFC Life Insurance is expected to generate 0.77 times more return on investment than Patanjali Foods. However, HDFC Life Insurance is 1.3 times less risky than Patanjali Foods. It trades about 0.1 of its potential returns per unit of risk. Patanjali Foods Limited is currently generating about 0.0 per unit of risk. If you would invest  70,654  in HDFC Life Insurance on April 24, 2025 and sell it today you would earn a total of  5,676  from holding HDFC Life Insurance or generate 8.03% return on investment over 90 days.

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

HDFC Life Insurance  vs.  Patanjali Foods Limited

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.

Patanjali Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with HDFC Life and Patanjali Foods

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

The idea behind HDFC Life Insurance and Patanjali Foods 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.