Correlation Between TripAdvisor and Tuniu Corp

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

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

Diversification Opportunities for TripAdvisor and Tuniu Corp

-0.37

Correlation Coefficient

TripAdvisor  Tuniu Corp

Very good diversification

The 3 months correlation between TripAdvisor and Tuniu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TripAdvisor and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and TripAdvisor 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 TripAdvisor 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 TripAdvisor i.e., TripAdvisor and Tuniu Corp go up and down completely randomly.

Pair Corralation between TripAdvisor and Tuniu Corp

Given the investment horizon of 90 days TripAdvisor is expected to under-perform the Tuniu Corp. In addition to that, TripAdvisor is 1.22 times more volatile than Tuniu Corp. It trades about -0.01 of its total potential returns per unit of risk. Tuniu Corp is currently generating about 0.11 per unit of volatility. If you would invest  93.00  in Tuniu Corp on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Tuniu Corp or generate 16.13% return on investment over 90 days.

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

TripAdvisor  vs.  Tuniu Corp

TripAdvisor

Risk-Adjusted Performance

Very Weak

Over the last 90 days TripAdvisor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, TripAdvisor is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail 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 TripAdvisor and Tuniu Corp

The main advantage of trading using opposite TripAdvisor and Tuniu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TripAdvisor 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 TripAdvisor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.