Correlation Between HDFC Life and PTC India

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

Diversification Opportunities for HDFC Life and PTC India

0.76

Correlation Coefficient

HDFC Life  PTC India

Poor diversification

The 3 months correlation between HDFC and PTC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Life Insurance and PTC India Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Financial 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 PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Financial has no effect on the direction of HDFC Life i.e., HDFC Life and PTC India go up and down completely randomly.

Pair Corralation between HDFC Life and PTC India

Assuming the 90 days trading horizon HDFC Life is expected to generate 2.91 times less return on investment than PTC India. But when comparing it to its historical volatility, HDFC Life Insurance is 1.79 times less risky than PTC India. It trades about 0.08 of its potential returns per unit of risk. PTC India Financial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,434  in PTC India Financial on April 23, 2025 and sell it today you would earn a total of  669.00  from holding PTC India Financial or generate 19.48% return on investment over 90 days.

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

HDFC Life Insurance  vs.  PTC India Financial

HDFC Life Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Life Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, HDFC Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PTC India Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTC India Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, PTC India exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HDFC Life and PTC India

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

The idea behind HDFC Life Insurance and PTC India Financial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.