Correlation Between TUI AG and MakeMyTrip

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Can any of the company-specific risk be diversified away by investing in both TUI AG 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 TUI AG and MakeMyTrip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TUI AG and MakeMyTrip Limited, you can compare the effects of market volatilities on TUI AG 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 TUI AG with a short position of MakeMyTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of TUI AG and MakeMyTrip.

Diversification Opportunities for TUI AG and MakeMyTrip

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between TUI and MakeMyTrip is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TUI AG and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and TUI AG 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 TUI AG 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 TUI AG i.e., TUI AG and MakeMyTrip go up and down completely randomly.

Pair Corralation between TUI AG and MakeMyTrip

Assuming the 90 days trading horizon TUI AG is expected to generate 9.43 times less return on investment than MakeMyTrip. But when comparing it to its historical volatility, TUI AG is 1.35 times less risky than MakeMyTrip. It trades about 0.02 of its potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,000  in MakeMyTrip Limited on September 2, 2024 and sell it today you would earn a total of  6,745  from holding MakeMyTrip Limited or generate 168.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

TUI AG  vs.  MakeMyTrip Limited

 Performance 
       Timeline  
TUI AG 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in TUI AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TUI AG exhibited solid returns over the last few months and may actually be approaching a breakup point.
MakeMyTrip Limited 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MakeMyTrip reported solid returns over the last few months and may actually be approaching a breakup point.

TUI AG and MakeMyTrip Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TUI AG and MakeMyTrip

The main advantage of trading using opposite TUI AG and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TUI AG 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.
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The idea behind TUI AG 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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