Correlation Between GAMESTOP and MakeMyTrip

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

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

Diversification Opportunities for GAMESTOP and MakeMyTrip

0.81

Correlation Coefficient

GAMESTOP  MakeMyTrip

Very poor diversification

The 3 months correlation between GAMESTOP and MakeMyTrip is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and GAMESTOP 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 GAMESTOP 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 GAMESTOP i.e., GAMESTOP and MakeMyTrip go up and down completely randomly.

Pair Corralation between GAMESTOP and MakeMyTrip

Assuming the 90 days trading horizon GAMESTOP is expected to generate 1.45 times more return on investment than MakeMyTrip. However, GAMESTOP is 1.45 times more volatile than MakeMyTrip Limited. It trades about 0.15 of its potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.05 per unit of risk. If you would invest  1,931  in GAMESTOP on October 22, 2024 and sell it today you would earn a total of  708.00  from holding GAMESTOP or generate 36.66% return on investment over 90 days.

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

GAMESTOP  vs.  MakeMyTrip Limited

GAMESTOP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

MakeMyTrip Limited

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MakeMyTrip may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GAMESTOP and MakeMyTrip

The main advantage of trading using opposite GAMESTOP and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP 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 GAMESTOP 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.