Correlation Between Yatra Online and InterContinental

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

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

Diversification Opportunities for Yatra Online and InterContinental

-0.2

Correlation Coefficient

Yatra Online  InterContinental

Good diversification

The 3 months correlation between Yatra and InterContinental is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yatra Online and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Yatra Online i.e., Yatra Online and InterContinental go up and down completely randomly.

Pair Corralation between Yatra Online and InterContinental

Given the investment horizon of 90 days Yatra Online is expected to generate 3.4 times less return on investment than InterContinental. In addition to that, Yatra Online is 2.23 times more volatile than InterContinental Hotels Group. It trades about 0.01 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.08 per unit of volatility. If you would invest  5,777  in InterContinental Hotels Group on January 31, 2024 and sell it today you would earn a total of  4,238  from holding InterContinental Hotels Group or generate 73.36% return on investment over 90 days.

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

Yatra Online  vs.  InterContinental Hotels Group

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 May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

InterContinental Hotels

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, InterContinental may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Yatra Online and InterContinental

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

The idea behind Yatra Online and InterContinental Hotels Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.