Correlation Between Tuniu Corp and MakeMyTrip

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

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

Diversification Opportunities for Tuniu Corp and MakeMyTrip

-0.09

Correlation Coefficient

Tuniu Corp  MakeMyTrip

Good diversification

The 3 months correlation between Tuniu and MakeMyTrip is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tuniu Corp and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Tuniu Corp 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 Tuniu Corp 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 Tuniu Corp i.e., Tuniu Corp and MakeMyTrip go up and down completely randomly.

Pair Corralation between Tuniu Corp and MakeMyTrip

Given the investment horizon of 90 days Tuniu Corp is expected to generate 1.73 times more return on investment than MakeMyTrip. However, Tuniu Corp is 1.73 times more volatile than MakeMyTrip Limited. It trades about 0.1 of its potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.09 per unit of risk. If you would invest  81.00  in Tuniu Corp on August 30, 2024 and sell it today you would earn a total of  28.00  from holding Tuniu Corp or generate 34.57% return on investment over 90 days.

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

Tuniu Corp  vs.  MakeMyTrip Limited

Tuniu Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tuniu Corp are ranked lower than 7 (%) 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.

MakeMyTrip Limited

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MakeMyTrip unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tuniu Corp and MakeMyTrip

The main advantage of trading using opposite Tuniu Corp and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tuniu Corp 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 Tuniu Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..