Correlation Between IG Petrochemicals and Yatra Online

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

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

Diversification Opportunities for IG Petrochemicals and Yatra Online

0.24

Correlation Coefficient

IG Petrochemicals  Yatra Online

Modest diversification

The 3 months correlation between IGPL and Yatra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding IG Petrochemicals Limited and Yatra Online Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatra Online Limited and IG Petrochemicals 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 IG Petrochemicals Limited 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 Limited has no effect on the direction of IG Petrochemicals i.e., IG Petrochemicals and Yatra Online go up and down completely randomly.

Pair Corralation between IG Petrochemicals and Yatra Online

Assuming the 90 days trading horizon IG Petrochemicals Limited is expected to generate 1.02 times more return on investment than Yatra Online. However, IG Petrochemicals is 1.02 times more volatile than Yatra Online Limited. It trades about 0.05 of its potential returns per unit of risk. Yatra Online Limited is currently generating about -0.01 per unit of risk. If you would invest  40,860  in IG Petrochemicals Limited on October 5, 2024 and sell it today you would earn a total of  17,200  from holding IG Petrochemicals Limited or generate 42.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.05%
Values	Daily Returns

IG Petrochemicals Limited  vs.  Yatra Online Limited

IG Petrochemicals

Risk-Adjusted Performance

2 of 100

Insignificant

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

Yatra Online Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yatra Online Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Yatra Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IG Petrochemicals and Yatra Online

The main advantage of trading using opposite IG Petrochemicals and Yatra Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IG Petrochemicals 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 IG Petrochemicals Limited and Yatra Online 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.