Correlation Between Yellow Pages and Stingray

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

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

Diversification Opportunities for Yellow Pages and Stingray

0.39

Correlation Coefficient

Yellow Pages  Stingray

Weak diversification

The 3 months correlation between Yellow and Stingray is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Yellow Pages i.e., Yellow Pages and Stingray go up and down completely randomly.

Pair Corralation between Yellow Pages and Stingray

Given the investment horizon of 90 days Yellow Pages Limited is expected to generate 1.93 times more return on investment than Stingray. However, Yellow Pages is 1.93 times more volatile than Stingray Group. It trades about -0.05 of its potential returns per unit of risk. Stingray Group is currently generating about -0.27 per unit of risk. If you would invest  1,147  in Yellow Pages Limited on October 13, 2024 and sell it today you would lose (31.00) from holding Yellow Pages Limited or give up 2.7% of portfolio value over 90 days.

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

Yellow Pages Limited  vs.  Stingray Group

Yellow Pages Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Yellow Pages displayed solid returns over the last few months and may actually be approaching a breakup point.

Stingray Group

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Yellow Pages and Stingray

The main advantage of trading using opposite Yellow Pages and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.

The idea behind Yellow Pages Limited and Stingray Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.