Correlation Between Procter Gamble and Yes Bank

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

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

Diversification Opportunities for Procter Gamble and Yes Bank

0.32

Correlation Coefficient

Procter Gamble  Yes Bank

Weak diversification

The 3 months correlation between Procter and Yes is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health 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 Procter Gamble 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 Procter Gamble Health 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 Procter Gamble i.e., Procter Gamble and Yes Bank go up and down completely randomly.

Pair Corralation between Procter Gamble and Yes Bank

Assuming the 90 days trading horizon Procter Gamble is expected to generate 1.81 times less return on investment than Yes Bank. But when comparing it to its historical volatility, Procter Gamble Health is 2.18 times less risky than Yes Bank. It trades about 0.04 of its potential returns per unit of risk. Yes Bank Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,720  in Yes Bank Limited on September 26, 2024 and sell it today you would earn a total of  260.00  from holding Yes Bank Limited or generate 15.12% return on investment over 90 days.

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

Procter Gamble Health  vs.  Yes Bank Limited

Procter Gamble Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Procter Gamble 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 unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Procter Gamble and Yes Bank

The main advantage of trading using opposite Procter Gamble and Yes Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble Health 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.