Correlation Between MakeMyTrip and Playa Hotels

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

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

Diversification Opportunities for MakeMyTrip and Playa Hotels

-0.56

Correlation Coefficient

MakeMyTrip  Playa Hotels

Excellent diversification

The 3 months correlation between MakeMyTrip and Playa is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and Playa Hotels go up and down completely randomly.

Pair Corralation between MakeMyTrip and Playa Hotels

Given the investment horizon of 90 days MakeMyTrip Limited is expected to under-perform the Playa Hotels. In addition to that, MakeMyTrip is 3.25 times more volatile than Playa Hotels Resorts. It trades about -0.03 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.13 per unit of volatility. If you would invest  1,237  in Playa Hotels Resorts on December 29, 2024 and sell it today you would earn a total of  96.00  from holding Playa Hotels Resorts or generate 7.76% 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.  Playa Hotels Resorts

MakeMyTrip Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days MakeMyTrip Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Playa Hotels Resorts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Playa Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MakeMyTrip and Playa Hotels

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

The idea behind MakeMyTrip Limited and Playa Hotels Resorts 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.