Correlation Between Siamgas and MakeMyTrip

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

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

Diversification Opportunities for Siamgas and MakeMyTrip

0.24

Correlation Coefficient

Siamgas  MakeMyTrip

Modest diversification

The 3 months correlation between Siamgas and MakeMyTrip is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas And Petrochemicals and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Siamgas 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 Siamgas And Petrochemicals are associated (or correlated) with MakeMyTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MakeMyTrip Limited has no effect on the direction of Siamgas i.e., Siamgas and MakeMyTrip go up and down completely randomly.

Pair Corralation between Siamgas and MakeMyTrip

Assuming the 90 days trading horizon Siamgas is expected to generate 11.13 times less return on investment than MakeMyTrip. In addition to that, Siamgas is 1.03 times more volatile than MakeMyTrip Limited. It trades about 0.01 of its total potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.15 per unit of volatility. If you would invest  9,902  in MakeMyTrip Limited on October 7, 2024 and sell it today you would earn a total of  1,408  from holding MakeMyTrip Limited or generate 14.22% return on investment over 90 days.

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

Siamgas And Petrochemicals  vs.  MakeMyTrip Limited

Siamgas And Petroche

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siamgas And Petrochemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siamgas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MakeMyTrip Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MakeMyTrip reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siamgas and MakeMyTrip

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

The idea behind Siamgas And Petrochemicals and MakeMyTrip 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.