Correlation Between Yum Brands and Yatra Online

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

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

Diversification Opportunities for Yum Brands and Yatra Online

-0.48

Correlation Coefficient

Yum Brands  Yatra Online

Very good diversification

The 3 months correlation between Yum and Yatra is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Yatra Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatra Online and Yum Brands 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 Yum Brands 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 has no effect on the direction of Yum Brands i.e., Yum Brands and Yatra Online go up and down completely randomly.

Pair Corralation between Yum Brands and Yatra Online

Considering the 90-day investment horizon Yum Brands is expected to under-perform the Yatra Online. But the stock apears to be less risky and, when comparing its historical volatility, Yum Brands is 2.97 times less risky than Yatra Online. The stock trades about -0.03 of its potential returns per unit of risk. The Yatra Online is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Yatra Online on February 14, 2024 and sell it today you would earn a total of  7.00  from holding Yatra Online or generate 4.96% return on investment over 90 days.

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

Yum Brands  vs.  Yatra Online

Yum Brands

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Yum Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Yum Brands and Yatra Online

The main advantage of trading using opposite Yum Brands and Yatra Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands 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 Yum Brands and Yatra Online 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.