Correlation Between Tata Consultancy and Yatra Online

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

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

Diversification Opportunities for Tata Consultancy and Yatra Online

0.02

Correlation Coefficient

Tata Consultancy  Yatra Online

Significant diversification

The 3 months correlation between Tata and Yatra is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tata Consultancy Services and Yatra Online Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatra Online Limited and Tata Consultancy 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 Tata Consultancy Services are associated (or correlated) with Yatra Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yatra Online Limited has no effect on the direction of Tata Consultancy i.e., Tata Consultancy and Yatra Online go up and down completely randomly.

Pair Corralation between Tata Consultancy and Yatra Online

Assuming the 90 days trading horizon Tata Consultancy Services is expected to generate 0.54 times more return on investment than Yatra Online. However, Tata Consultancy Services is 1.86 times less risky than Yatra Online. It trades about 0.05 of its potential returns per unit of risk. Yatra Online Limited is currently generating about -0.01 per unit of risk. If you would invest  315,271  in Tata Consultancy Services on September 28, 2024 and sell it today you would earn a total of  101,214  from holding Tata Consultancy Services or generate 32.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.04%
Values	Daily Returns

Tata Consultancy Services  vs.  Yatra Online Limited

Tata Consultancy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Consultancy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Tata Consultancy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unfluctuating 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.

Pair Trading with Tata Consultancy and Yatra Online

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

The idea behind Tata Consultancy Services and Yatra Online 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.