Correlation Between Carnival Plc and Yatra Online

Can any of the company-specific risk be diversified away by investing in both Carnival Plc 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 Carnival Plc and Yatra Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnival Plc ADS and Yatra Online, you can compare the effects of market volatilities on Carnival Plc 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 Carnival Plc with a short position of Yatra Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Yatra Online.

Diversification Opportunities for Carnival Plc and Yatra Online

0.74

Correlation Coefficient

Carnival Plc  Yatra Online

Poor diversification

The 3 months correlation between Carnival and Yatra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Yatra Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatra Online and Carnival Plc 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 Carnival Plc ADS 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 has no effect on the direction of Carnival Plc i.e., Carnival Plc and Yatra Online go up and down completely randomly.

Pair Corralation between Carnival Plc and Yatra Online

Considering the 90-day investment horizon Carnival Plc ADS is expected to generate 0.92 times more return on investment than Yatra Online. However, Carnival Plc ADS is 1.09 times less risky than Yatra Online. It trades about -0.09 of its potential returns per unit of risk. Yatra Online is currently generating about -0.23 per unit of risk. If you would invest  2,261  in Carnival Plc ADS on December 28, 2024 and sell it today you would lose (375.00) from holding Carnival Plc ADS or give up 16.59% of portfolio value over 90 days.

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

Carnival Plc ADS  vs.  Yatra Online

Carnival Plc ADS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Yatra Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yatra Online has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carnival Plc and Yatra Online

The main advantage of trading using opposite Carnival Plc and Yatra Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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 Carnival Plc ADS and Yatra Online 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.