Correlation Between Royal Caribbean and Tuniu Corp

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

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

Diversification Opportunities for Royal Caribbean and Tuniu Corp

-0.75

Correlation Coefficient

Royal Caribbean  Tuniu Corp

Pay attention - limited upside

The 3 months correlation between Royal and Tuniu is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and Royal Caribbean 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 Royal Caribbean Cruises are associated (or correlated) with Tuniu Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuniu Corp has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Tuniu Corp go up and down completely randomly.

Pair Corralation between Royal Caribbean and Tuniu Corp

Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 0.44 times more return on investment than Tuniu Corp. However, Royal Caribbean Cruises is 2.25 times less risky than Tuniu Corp. It trades about 0.13 of its potential returns per unit of risk. Tuniu Corp is currently generating about -0.01 per unit of risk. If you would invest  6,319  in Royal Caribbean Cruises on October 4, 2024 and sell it today you would earn a total of  16,583  from holding Royal Caribbean Cruises or generate 262.43% return on investment over 90 days.

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

Royal Caribbean Cruises  vs.  Tuniu Corp

Royal Caribbean Cruises

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Caribbean Cruises are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Royal Caribbean disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tuniu Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuniu Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Royal Caribbean and Tuniu Corp

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

The idea behind Royal Caribbean Cruises and Tuniu Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.