Correlation Between IDBI Bank and Yes Bank

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

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

Diversification Opportunities for IDBI Bank and Yes Bank

0.77

Correlation Coefficient

IDBI Bank  Yes Bank

Poor diversification

The 3 months correlation between IDBI and Yes is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IDBI Bank 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 IDBI 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 IDBI Bank 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 IDBI Bank i.e., IDBI Bank and Yes Bank go up and down completely randomly.

Pair Corralation between IDBI Bank and Yes Bank

Assuming the 90 days trading horizon IDBI Bank Limited is expected to generate 1.61 times more return on investment than Yes Bank. However, IDBI Bank is 1.61 times more volatile than Yes Bank Limited. It trades about 0.03 of its potential returns per unit of risk. Yes Bank Limited is currently generating about -0.09 per unit of risk. If you would invest  8,168  in IDBI Bank Limited on October 21, 2024 and sell it today you would earn a total of  233.00  from holding IDBI Bank Limited or generate 2.85% return on investment over 90 days.

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

IDBI Bank Limited  vs.  Yes Bank Limited

IDBI Bank Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IDBI Bank Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IDBI Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with IDBI Bank and Yes Bank

The main advantage of trading using opposite IDBI Bank and Yes Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDBI Bank 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 IDBI Bank 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 Commodity Directory module to find actively traded commodities issued by global exchanges.