Correlation Between Yatra Online and New Momentum

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

By analyzing existing cross correlation between Yatra Online and New Momentum, you can compare the effects of market volatilities on Yatra Online and New Momentum 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 New Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yatra Online and New Momentum.

Diversification Opportunities for Yatra Online and New Momentum

0.54

Correlation Coefficient

Yatra Online  New Momentum

Very weak diversification

The 3 months correlation between Yatra and New is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online and New Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Momentum 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 are associated (or correlated) with New Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Momentum has no effect on the direction of Yatra Online i.e., Yatra Online and New Momentum go up and down completely randomly.

Pair Corralation between Yatra Online and New Momentum

Given the investment horizon of 90 days Yatra Online is expected to under-perform the New Momentum. But the stock apears to be less risky and, when comparing its historical volatility, Yatra Online is 5.36 times less risky than New Momentum. The stock trades about -0.19 of its potential returns per unit of risk. The New Momentum is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.07  in New Momentum on September 25, 2024 and sell it today you would lose (0.02) from holding New Momentum or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Yatra Online  vs.  New Momentum

Yatra Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yatra Online has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

New Momentum

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Momentum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Momentum showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yatra Online and New Momentum

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

The idea behind Yatra Online and New Momentum 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.