Correlation Between Sumitomo Mitsui and YATRA ONLINE

Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and YATRA ONLINE 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 Sumitomo Mitsui and YATRA ONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumitomo Mitsui Construction and YATRA ONLINE DL 0001, you can compare the effects of market volatilities on Sumitomo Mitsui and YATRA ONLINE 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 Sumitomo Mitsui with a short position of YATRA ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and YATRA ONLINE.

Diversification Opportunities for Sumitomo Mitsui and YATRA ONLINE

-0.53

Correlation Coefficient

Sumitomo Mitsui  YATRA ONLINE

Excellent diversification

The 3 months correlation between Sumitomo and YATRA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and YATRA ONLINE DL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YATRA ONLINE DL and Sumitomo Mitsui 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 Sumitomo Mitsui Construction are associated (or correlated) with YATRA ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YATRA ONLINE DL has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and YATRA ONLINE go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and YATRA ONLINE

Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.56 times more return on investment than YATRA ONLINE. However, Sumitomo Mitsui Construction is 1.78 times less risky than YATRA ONLINE. It trades about 0.07 of its potential returns per unit of risk. YATRA ONLINE DL 0001 is currently generating about -0.2 per unit of risk. If you would invest  236.00  in Sumitomo Mitsui Construction on December 30, 2024 and sell it today you would earn a total of  18.00  from holding Sumitomo Mitsui Construction or generate 7.63% return on investment over 90 days.

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

Sumitomo Mitsui Construction  vs.  YATRA ONLINE DL 0001

Sumitomo Mitsui Cons

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Construction are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sumitomo Mitsui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

YATRA ONLINE DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days YATRA ONLINE DL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sumitomo Mitsui and YATRA ONLINE

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

The idea behind Sumitomo Mitsui Construction and YATRA ONLINE DL 0001 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.