Correlation Between Industrial Investment and Yes Bank

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

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

Diversification Opportunities for Industrial Investment and Yes Bank

-0.39

Correlation Coefficient

Industrial Investment  Yes Bank

Very good diversification

The 3 months correlation between Industrial and Yes is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust 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 Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and Yes Bank go up and down completely randomly.

Pair Corralation between Industrial Investment and Yes Bank

Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the Yes Bank. In addition to that, Industrial Investment is 1.74 times more volatile than Yes Bank Limited. It trades about -0.08 of its total potential returns per unit of risk. Yes Bank Limited is currently generating about -0.04 per unit of volatility. If you would invest  2,062  in Yes Bank Limited on October 6, 2024 and sell it today you would lose (66.00) from holding Yes Bank Limited or give up 3.2% of portfolio value over 90 days.

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

Industrial Investment Trust  vs.  Yes Bank Limited

Industrial Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment unveiled 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 quite persistent basic indicators, Yes Bank is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Industrial Investment and Yes Bank

The main advantage of trading using opposite Industrial Investment and Yes Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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 Industrial Investment Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.