Correlation Between Next Mediaworks and HDFC Life

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

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

Diversification Opportunities for Next Mediaworks and HDFC Life

0.48

Correlation Coefficient

Next Mediaworks  HDFC Life

Very weak diversification

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

Pair Corralation between Next Mediaworks and HDFC Life

Assuming the 90 days trading horizon Next Mediaworks is expected to generate 1.75 times less return on investment than HDFC Life. In addition to that, Next Mediaworks is 1.02 times more volatile than HDFC Life Insurance. It trades about 0.04 of its total potential returns per unit of risk. HDFC Life Insurance is currently generating about 0.06 per unit of volatility. If you would invest  34,893  in HDFC Life Insurance on March 23, 2025 and sell it today you would earn a total of  43,002  from holding HDFC Life Insurance or generate 123.24% return on investment over 90 days.

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

Next Mediaworks Limited  vs.  HDFC Life Insurance

Next Mediaworks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.

HDFC Life Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Life Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, HDFC Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Next Mediaworks and HDFC Life

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

The idea behind Next Mediaworks Limited and HDFC Life Insurance 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.