Correlation Between MakeMyTrip and GreenTree Hospitality

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

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

Diversification Opportunities for MakeMyTrip and GreenTree Hospitality

-0.42

Correlation Coefficient

MakeMyTrip  GreenTree Hospitality

Very good diversification

The 3 months correlation between MakeMyTrip and GreenTree is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality and MakeMyTrip 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 MakeMyTrip Limited are associated (or correlated) with GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and GreenTree Hospitality go up and down completely randomly.

Pair Corralation between MakeMyTrip and GreenTree Hospitality

Given the investment horizon of 90 days MakeMyTrip Limited is expected to generate 1.0 times more return on investment than GreenTree Hospitality. However, MakeMyTrip Limited is 1.0 times less risky than GreenTree Hospitality. It trades about 0.07 of its potential returns per unit of risk. GreenTree Hospitality Group is currently generating about 0.06 per unit of risk. If you would invest  10,337  in MakeMyTrip Limited on September 14, 2024 and sell it today you would earn a total of  1,413  from holding MakeMyTrip Limited or generate 13.67% return on investment over 90 days.

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

MakeMyTrip Limited  vs.  GreenTree Hospitality Group

MakeMyTrip Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MakeMyTrip unveiled solid returns over the last few months and may actually be approaching a breakup point.

GreenTree Hospitality

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTree Hospitality Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, GreenTree Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MakeMyTrip and GreenTree Hospitality

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

The idea behind MakeMyTrip Limited and GreenTree Hospitality 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.