Correlation Between Tradegate and MakeMyTrip

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

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

Diversification Opportunities for Tradegate and MakeMyTrip

0.2

Correlation Coefficient

Tradegate  MakeMyTrip

Modest diversification

The 3 months correlation between Tradegate and MakeMyTrip is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Tradegate i.e., Tradegate and MakeMyTrip go up and down completely randomly.

Pair Corralation between Tradegate and MakeMyTrip

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the MakeMyTrip. But the stock apears to be less risky and, when comparing its historical volatility, Tradegate AG Wertpapierhandelsbank is 2.34 times less risky than MakeMyTrip. The stock trades about -0.03 of its potential returns per unit of risk. The MakeMyTrip Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,520  in MakeMyTrip Limited on October 26, 2024 and sell it today you would earn a total of  7,865  from holding MakeMyTrip Limited or generate 312.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Tradegate AG Wertpapierhandels  vs.  MakeMyTrip Limited

Tradegate AG Wertpap

Risk-Adjusted Performance

10 of 100

OK

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

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. 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 Tradegate and MakeMyTrip

The main advantage of trading using opposite Tradegate and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.