Correlation Between Yatra Online and Fertilizers

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

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

Diversification Opportunities for Yatra Online and Fertilizers

0.2

Correlation Coefficient

Yatra Online  Fertilizers

Modest diversification

The 3 months correlation between Yatra and Fertilizers is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online Limited and Fertilizers and Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizers and Chemicals and Yatra Online 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 Yatra Online Limited are associated (or correlated) with Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizers and Chemicals has no effect on the direction of Yatra Online i.e., Yatra Online and Fertilizers go up and down completely randomly.

Pair Corralation between Yatra Online and Fertilizers

Assuming the 90 days trading horizon Yatra Online Limited is expected to generate 1.13 times more return on investment than Fertilizers. However, Yatra Online is 1.13 times more volatile than Fertilizers and Chemicals. It trades about 0.2 of its potential returns per unit of risk. Fertilizers and Chemicals is currently generating about -0.06 per unit of risk. If you would invest  10,465  in Yatra Online Limited on October 4, 2024 and sell it today you would earn a total of  1,109  from holding Yatra Online Limited or generate 10.6% return on investment over 90 days.

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

Yatra Online Limited  vs.  Fertilizers and Chemicals

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Fertilizers and Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Fertilizers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yatra Online and Fertilizers

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

The idea behind Yatra Online Limited and Fertilizers and Chemicals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.