Correlation Between MakeMyTrip and Lizhan Environmental

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

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

Diversification Opportunities for MakeMyTrip and Lizhan Environmental

0.0

Correlation Coefficient

MakeMyTrip  Lizhan Environmental

Pay attention - limited upside

The 3 months correlation between MakeMyTrip and Lizhan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and Lizhan Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhan Environmental 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 Lizhan Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhan Environmental has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and Lizhan Environmental go up and down completely randomly.

Pair Corralation between MakeMyTrip and Lizhan Environmental

If you would invest  2,853  in MakeMyTrip Limited on October 23, 2024 and sell it today you would earn a total of  7,827  from holding MakeMyTrip Limited or generate 274.34% return on investment over 90 days.

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

MakeMyTrip Limited  vs.  Lizhan Environmental

MakeMyTrip Limited

Risk-Adjusted Performance

4 of 100

Weak

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. In spite of comparatively weak basic indicators, MakeMyTrip may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lizhan Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lizhan Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lizhan Environmental is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MakeMyTrip and Lizhan Environmental

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

The idea behind MakeMyTrip Limited and Lizhan Environmental 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.