Correlation Between THAI BEVERAGE and MakeMyTrip
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE 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 THAI BEVERAGE and MakeMyTrip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and MakeMyTrip Limited, you can compare the effects of market volatilities on THAI BEVERAGE 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 THAI BEVERAGE with a short position of MakeMyTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and MakeMyTrip.
Diversification Opportunities for THAI BEVERAGE and MakeMyTrip
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and MakeMyTrip is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE i.e., THAI BEVERAGE and MakeMyTrip go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and MakeMyTrip
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.82 times more return on investment than MakeMyTrip. However, THAI BEVERAGE is 1.21 times less risky than MakeMyTrip. It trades about 0.04 of its potential returns per unit of risk. MakeMyTrip Limited is currently generating about -0.04 per unit of risk. If you would invest 36.00 in THAI BEVERAGE on October 26, 2024 and sell it today you would earn a total of 1.00 from holding THAI BEVERAGE or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. MakeMyTrip Limited
Performance |
| Timeline |
| THAI BEVERAGE |
| MakeMyTrip Limited |
THAI BEVERAGE and MakeMyTrip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and MakeMyTrip
The main advantage of trading using opposite THAI BEVERAGE and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE 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.| THAI BEVERAGE vs. Hitachi Construction Machinery | THAI BEVERAGE vs. WESANA HEALTH HOLD | THAI BEVERAGE vs. Scandinavian Tobacco Group | THAI BEVERAGE vs. Sumitomo Mitsui Construction |
| MakeMyTrip vs. United Natural Foods | MakeMyTrip vs. THAI BEVERAGE | MakeMyTrip vs. AIR PRODCHEMICALS | MakeMyTrip vs. JD SPORTS FASH |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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