Correlation Between Carnival Plc and Tuniu Corp

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

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

Diversification Opportunities for Carnival Plc and Tuniu Corp

-0.42

Correlation Coefficient

Carnival Plc  Tuniu Corp

Very good diversification

The 3 months correlation between Carnival and Tuniu is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and Carnival Plc 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 Carnival Plc ADS 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 Carnival Plc i.e., Carnival Plc and Tuniu Corp go up and down completely randomly.

Pair Corralation between Carnival Plc and Tuniu Corp

Considering the 90-day investment horizon Carnival Plc ADS is expected to generate 0.64 times more return on investment than Tuniu Corp. However, Carnival Plc ADS is 1.56 times less risky than Tuniu Corp. It trades about 0.22 of its potential returns per unit of risk. Tuniu Corp is currently generating about -0.13 per unit of risk. If you would invest  1,667  in Carnival Plc ADS on September 28, 2024 and sell it today you would earn a total of  654.00  from holding Carnival Plc ADS or generate 39.23% return on investment over 90 days.

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

Carnival Plc ADS  vs.  Tuniu Corp

Carnival Plc ADS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tuniu Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuniu Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Carnival Plc and Tuniu Corp

The main advantage of trading using opposite Carnival Plc and Tuniu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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 Carnival Plc ADS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.