Correlation Between Steel Authority and Yatra Online

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

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

Diversification Opportunities for Steel Authority and Yatra Online

0.39

Correlation Coefficient

Steel Authority  Yatra Online

Weak diversification

The 3 months correlation between Steel and Yatra is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of 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 Steel Authority 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 Steel Authority of 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 Steel Authority i.e., Steel Authority and Yatra Online go up and down completely randomly.

Pair Corralation between Steel Authority and Yatra Online

Assuming the 90 days trading horizon Steel Authority of is expected to under-perform the Yatra Online. But the stock apears to be less risky and, when comparing its historical volatility, Steel Authority of is 1.06 times less risky than Yatra Online. The stock trades about -0.03 of its potential returns per unit of risk. The Yatra Online Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,866  in Yatra Online Limited on October 26, 2024 and sell it today you would lose (510.00) from holding Yatra Online Limited or give up 4.69% of portfolio value over 90 days.

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

Steel Authority of  vs.  Yatra Online Limited

Steel Authority

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Steel Authority 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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Steel Authority and Yatra Online

The main advantage of trading using opposite Steel Authority and Yatra Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority 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 Steel Authority of 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.