Correlation Between Yes Bank and Karur Vysya

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

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

Diversification Opportunities for Yes Bank and Karur Vysya

-0.14

Correlation Coefficient

Yes Bank  Karur Vysya

Good diversification

The 3 months correlation between Yes and Karur is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Yes Bank Limited and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank and Yes Bank 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 Yes Bank Limited are associated (or correlated) with Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of Yes Bank i.e., Yes Bank and Karur Vysya go up and down completely randomly.

Pair Corralation between Yes Bank and Karur Vysya

Assuming the 90 days trading horizon Yes Bank Limited is expected to under-perform the Karur Vysya. But the stock apears to be less risky and, when comparing its historical volatility, Yes Bank Limited is 1.09 times less risky than Karur Vysya. The stock trades about -0.07 of its potential returns per unit of risk. The Karur Vysya Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  22,000  in Karur Vysya Bank on September 12, 2024 and sell it today you would earn a total of  2,276  from holding Karur Vysya Bank or generate 10.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Yes Bank Limited  vs.  Karur Vysya Bank

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 latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Karur Vysya Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Karur Vysya may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Yes Bank and Karur Vysya

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

The idea behind Yes Bank Limited and Karur Vysya Bank 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.