Correlation Between Yatra Online and NMDC Steel

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

Diversification Opportunities for Yatra Online and NMDC Steel

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Yatra and NMDC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online Limited and NMDC Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMDC Steel Limited 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 NMDC Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMDC Steel Limited has no effect on the direction of Yatra Online i.e., Yatra Online and NMDC Steel go up and down completely randomly.

Pair Corralation between Yatra Online and NMDC Steel

Assuming the 90 days trading horizon Yatra Online Limited is expected to under-perform the NMDC Steel. But the stock apears to be less risky and, when comparing its historical volatility, Yatra Online Limited is 1.21 times less risky than NMDC Steel. The stock trades about -0.04 of its potential returns per unit of risk. The NMDC Steel Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,175  in NMDC Steel Limited on November 6, 2024 and sell it today you would earn a total of  1,039  from holding NMDC Steel Limited or generate 32.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy69.09%
ValuesDaily Returns

Yatra Online Limited  vs.  NMDC Steel Limited

 Performance 
       Timeline  
Yatra Online Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
NMDC Steel Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NMDC Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Yatra Online and NMDC Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yatra Online and NMDC Steel

The main advantage of trading using opposite Yatra Online and NMDC Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yatra Online position performs unexpectedly, NMDC 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 NMDC Steel will offset losses from the drop in NMDC Steel's long position.
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The idea behind Yatra Online Limited and NMDC Steel 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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