Correlation Between MakeMyTrip and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both MakeMyTrip and Booking Holdings 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 MakeMyTrip and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MakeMyTrip Limited and Booking Holdings, you can compare the effects of market volatilities on MakeMyTrip and Booking Holdings 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 MakeMyTrip with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MakeMyTrip and Booking Holdings.
Diversification Opportunities for MakeMyTrip and Booking Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MakeMyTrip and Booking is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and MakeMyTrip 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 MakeMyTrip Limited are associated (or correlated) with Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and Booking Holdings go up and down completely randomly.
Pair Corralation between MakeMyTrip and Booking Holdings
Given the investment horizon of 90 days MakeMyTrip Limited is expected to generate 2.03 times more return on investment than Booking Holdings. However, MakeMyTrip is 2.03 times more volatile than Booking Holdings. It trades about 0.06 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.02 per unit of risk. If you would invest 10,319 in MakeMyTrip Limited on November 1, 2024 and sell it today you would earn a total of 826.00 from holding MakeMyTrip Limited or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MakeMyTrip Limited vs. Booking Holdings
Performance |
| Timeline |
| MakeMyTrip Limited |
| Booking Holdings |
MakeMyTrip and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MakeMyTrip and Booking Holdings
The main advantage of trading using opposite MakeMyTrip and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MakeMyTrip position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.| MakeMyTrip vs. Tuniu Corp | MakeMyTrip vs. Amadeus IT Group | MakeMyTrip vs. Travel Leisure Co | MakeMyTrip vs. TripAdvisor |
| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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