Correlation Between Yatra Online and Rama Steel

Can any of the company-specific risk be diversified away by investing in both Yatra Online and Rama Steel 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 Rama Steel 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 Rama Steel Tubes, you can compare the effects of market volatilities on Yatra Online and Rama Steel 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 Rama Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yatra Online and Rama Steel.

Diversification Opportunities for Yatra Online and Rama Steel

0.22

Correlation Coefficient

Yatra Online  Rama Steel

Modest diversification

The 3 months correlation between Yatra and Rama is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online Limited and Rama Steel Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rama Steel Tubes 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 Rama Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rama Steel Tubes has no effect on the direction of Yatra Online i.e., Yatra Online and Rama Steel go up and down completely randomly.

Pair Corralation between Yatra Online and Rama Steel

Assuming the 90 days trading horizon Yatra Online Limited is expected to under-perform the Rama Steel. But the stock apears to be less risky and, when comparing its historical volatility, Yatra Online Limited is 2.34 times less risky than Rama Steel. The stock trades about -0.26 of its potential returns per unit of risk. The Rama Steel Tubes is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,037  in Rama Steel Tubes on August 30, 2024 and sell it today you would earn a total of  204.00  from holding Rama Steel Tubes or generate 19.67% 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.  Rama Steel Tubes

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rama Steel Tubes

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rama Steel Tubes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Rama Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yatra Online and Rama Steel

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

The idea behind Yatra Online Limited and Rama Steel Tubes 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.