Correlation Between Choice International and Yes Bank

Can any of the company-specific risk be diversified away by investing in both Choice International and Yes Bank 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 Choice International and Yes Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Choice International Limited and Yes Bank Limited, you can compare the effects of market volatilities on Choice International and Yes Bank 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 Choice International with a short position of Yes Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice International and Yes Bank.

Diversification Opportunities for Choice International and Yes Bank

-0.64

Correlation Coefficient

Choice International  Yes Bank

Excellent diversification

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

Pair Corralation between Choice International and Yes Bank

Assuming the 90 days trading horizon Choice International Limited is expected to generate 1.02 times more return on investment than Yes Bank. However, Choice International is 1.02 times more volatile than Yes Bank Limited. It trades about 0.2 of its potential returns per unit of risk. Yes Bank Limited is currently generating about -0.07 per unit of risk. If you would invest  45,375  in Choice International Limited on September 12, 2024 and sell it today you would earn a total of  10,530  from holding Choice International Limited or generate 23.21% return on investment over 90 days.

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

Choice International Limited  vs.  Yes Bank Limited

Choice International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Choice International Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, Choice International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Yes Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yes Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Choice International and Yes Bank

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

The idea behind Choice International Limited and Yes Bank 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.