Correlation Between Travel Leisure and Tuniu Corp

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

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

Diversification Opportunities for Travel Leisure and Tuniu Corp

-0.35

Correlation Coefficient

Travel Leisure  Tuniu Corp

Very good diversification

The 3 months correlation between Travel and Tuniu is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and Travel Leisure 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 Travel Leisure Co 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 Travel Leisure i.e., Travel Leisure and Tuniu Corp go up and down completely randomly.

Pair Corralation between Travel Leisure and Tuniu Corp

Considering the 90-day investment horizon Travel Leisure Co is expected to under-perform the Tuniu Corp. But the stock apears to be less risky and, when comparing its historical volatility, Travel Leisure Co is 1.19 times less risky than Tuniu Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Tuniu Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  96.00  in Tuniu Corp on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Tuniu Corp or generate 14.58% return on investment over 90 days.

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

Travel Leisure Co  vs.  Tuniu Corp

Travel Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travel Leisure Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Travel Leisure is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Tuniu Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tuniu Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tuniu Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travel Leisure and Tuniu Corp

The main advantage of trading using opposite Travel Leisure and Tuniu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure 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 Travel Leisure Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.