Correlation Between Yatra Online and UltraTech Cement

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

Diversification Opportunities for Yatra Online and UltraTech Cement

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Yatra and UltraTech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online Limited and UltraTech Cement Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UltraTech Cement 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 UltraTech Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UltraTech Cement has no effect on the direction of Yatra Online i.e., Yatra Online and UltraTech Cement go up and down completely randomly.

Pair Corralation between Yatra Online and UltraTech Cement

Assuming the 90 days trading horizon Yatra Online Limited is expected to under-perform the UltraTech Cement. In addition to that, Yatra Online is 1.24 times more volatile than UltraTech Cement Limited. It trades about -0.15 of its total potential returns per unit of risk. UltraTech Cement Limited is currently generating about 0.22 per unit of volatility. If you would invest  1,101,300  in UltraTech Cement Limited on September 5, 2024 and sell it today you would earn a total of  83,935  from holding UltraTech Cement Limited or generate 7.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Yatra Online Limited  vs.  UltraTech Cement 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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
UltraTech Cement 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in UltraTech Cement Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, UltraTech Cement is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Yatra Online and UltraTech Cement Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yatra Online and UltraTech Cement

The main advantage of trading using opposite Yatra Online and UltraTech Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yatra Online position performs unexpectedly, UltraTech Cement 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 UltraTech Cement will offset losses from the drop in UltraTech Cement's long position.
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The idea behind Yatra Online Limited and UltraTech Cement 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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