Correlation Between MakeMyTrip and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both MakeMyTrip and Playa Hotels 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 Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MakeMyTrip Limited and Playa Hotels Resorts, you can compare the effects of market volatilities on MakeMyTrip and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MakeMyTrip and Playa Hotels.
Diversification Opportunities for MakeMyTrip and Playa Hotels
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MakeMyTrip and Playa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and Playa Hotels go up and down completely randomly.
Pair Corralation between MakeMyTrip and Playa Hotels
Given the investment horizon of 90 days MakeMyTrip Limited is expected to generate 1.87 times more return on investment than Playa Hotels. However, MakeMyTrip is 1.87 times more volatile than Playa Hotels Resorts. It trades about 0.14 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.08 per unit of risk. If you would invest 3,769 in MakeMyTrip Limited on August 25, 2024 and sell it today you would earn a total of 7,104 from holding MakeMyTrip Limited or generate 188.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MakeMyTrip Limited vs. Playa Hotels Resorts
Performance |
| Timeline |
| MakeMyTrip Limited |
| Playa Hotels Resorts |
MakeMyTrip and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MakeMyTrip and Playa Hotels
The main advantage of trading using opposite MakeMyTrip and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MakeMyTrip position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| MakeMyTrip vs. Tuniu Corp | MakeMyTrip vs. Mondee Holdings | MakeMyTrip vs. Amadeus IT Group | MakeMyTrip vs. Travel Leisure Co |
| Playa Hotels vs. Yatra Online | Playa Hotels vs. Despegar Corp | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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