Correlation Between Tips Music and Yes Bank

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

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

Diversification Opportunities for Tips Music and Yes Bank

-0.69

Correlation Coefficient

Tips Music  Yes Bank

Excellent diversification

The 3 months correlation between Tips and Yes is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tips Music Limited and Yes Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yes Bank Limited and Tips Music 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 Tips Music Limited are associated (or correlated) with Yes Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yes Bank Limited has no effect on the direction of Tips Music i.e., Tips Music and Yes Bank go up and down completely randomly.

Pair Corralation between Tips Music and Yes Bank

Assuming the 90 days trading horizon Tips Music Limited is expected to generate 1.4 times more return on investment than Yes Bank. However, Tips Music is 1.4 times more volatile than Yes Bank Limited. It trades about 0.1 of its potential returns per unit of risk. Yes Bank Limited is currently generating about -0.11 per unit of risk. If you would invest  70,014  in Tips Music Limited on September 26, 2024 and sell it today you would earn a total of  10,361  from holding Tips Music Limited or generate 14.8% return on investment over 90 days.

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

Tips Music Limited  vs.  Yes Bank Limited

Tips Music Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tips Music Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tips Music unveiled solid returns over the last few months and may actually be approaching a breakup point.

Yes Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yes Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tips Music and Yes Bank

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

The idea behind Tips Music Limited and Yes Bank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.