Correlation Between Krispy Kreme and MakeMyTrip

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

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

Diversification Opportunities for Krispy Kreme and MakeMyTrip

-0.33

Correlation Coefficient

Krispy Kreme  MakeMyTrip

Very good diversification

The 3 months correlation between Krispy and MakeMyTrip is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme i.e., Krispy Kreme and MakeMyTrip go up and down completely randomly.

Pair Corralation between Krispy Kreme and MakeMyTrip

Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the MakeMyTrip. But the stock apears to be less risky and, when comparing its historical volatility, Krispy Kreme is 2.05 times less risky than MakeMyTrip. The stock trades about -0.72 of its potential returns per unit of risk. The MakeMyTrip Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,873  in MakeMyTrip Limited on September 23, 2024 and sell it today you would earn a total of  227.00  from holding MakeMyTrip Limited or generate 2.09% return on investment over 90 days.

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

Krispy Kreme  vs.  MakeMyTrip Limited

Krispy Kreme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MakeMyTrip Limited

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Krispy Kreme and MakeMyTrip

The main advantage of trading using opposite Krispy Kreme and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme 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 Krispy Kreme 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.