Correlation Between Choice Hotels and YATRA ONLINE

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

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

Diversification Opportunities for Choice Hotels and YATRA ONLINE

-0.45

Correlation Coefficient

Choice Hotels  YATRA ONLINE

Very good diversification

The 3 months correlation between Choice and YATRA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International 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 Choice Hotels 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 Hotels International 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 Choice Hotels i.e., Choice Hotels and YATRA ONLINE go up and down completely randomly.

Pair Corralation between Choice Hotels and YATRA ONLINE

Assuming the 90 days horizon Choice Hotels International is expected to generate 0.54 times more return on investment than YATRA ONLINE. However, Choice Hotels International is 1.86 times less risky than YATRA ONLINE. It trades about 0.11 of its potential returns per unit of risk. YATRA ONLINE DL 0001 is currently generating about 0.01 per unit of risk. If you would invest  12,773  in Choice Hotels International on October 6, 2024 and sell it today you would earn a total of  827.00  from holding Choice Hotels International or generate 6.47% return on investment over 90 days.

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

Choice Hotels International  vs.  YATRA ONLINE DL 0001

Choice Hotels Intern

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Hotels International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Choice Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

YATRA ONLINE DL

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Choice Hotels and YATRA ONLINE

The main advantage of trading using opposite Choice Hotels and YATRA ONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels 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 Choice Hotels International 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.