Correlation Between HDFC Bank and Community Bankers

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

Diversification Opportunities for HDFC Bank and Community Bankers

-0.64

Correlation Coefficient

HDFC Bank  Community Bankers

Excellent diversification

The 3 months correlation between HDFC and Community is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers 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 Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of HDFC Bank i.e., HDFC Bank and Community Bankers go up and down completely randomly.

Pair Corralation between HDFC Bank and Community Bankers

Considering the 90-day investment horizon HDFC Bank Limited is expected to under-perform the Community Bankers. But the stock apears to be less risky and, when comparing its historical volatility, HDFC Bank Limited is 2.58 times less risky than Community Bankers. The stock trades about -0.11 of its potential returns per unit of risk. The Community Bankers is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Community Bankers on July 8, 2025 and sell it today you would earn a total of  85.00  from holding Community Bankers or generate 16.04% return on investment over 90 days.

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

HDFC Bank Limited  vs.  Community Bankers

HDFC Bank Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days HDFC Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Community Bankers

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Community Bankers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HDFC Bank and Community Bankers

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

The idea behind HDFC Bank Limited and Community Bankers 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.