Correlation Between MakeMyTrip and SosTravel SPA

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

By analyzing existing cross correlation between MakeMyTrip Limited and SosTravel SPA, you can compare the effects of market volatilities on MakeMyTrip and SosTravel SPA 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 SosTravel SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MakeMyTrip and SosTravel SPA.

Diversification Opportunities for MakeMyTrip and SosTravel SPA

0.0

Correlation Coefficient

MakeMyTrip  SosTravel SPA

Pay attention - limited upside

The 3 months correlation between MakeMyTrip and SosTravel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MakeMyTrip Limited and SosTravel SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SosTravel SPA 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 SosTravel SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SosTravel SPA has no effect on the direction of MakeMyTrip i.e., MakeMyTrip and SosTravel SPA go up and down completely randomly.

Pair Corralation between MakeMyTrip and SosTravel SPA

If you would invest  9,451  in MakeMyTrip Limited on September 26, 2024 and sell it today you would earn a total of  1,966  from holding MakeMyTrip Limited or generate 20.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MakeMyTrip Limited  vs.  SosTravel SPA

MakeMyTrip Limited

Risk-Adjusted Performance

8 of 100

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. In spite of comparatively weak basic indicators, MakeMyTrip unveiled solid returns over the last few months and may actually be approaching a breakup point.

SosTravel SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SosTravel SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SosTravel SPA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MakeMyTrip and SosTravel SPA

The main advantage of trading using opposite MakeMyTrip and SosTravel SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MakeMyTrip position performs unexpectedly, SosTravel SPA 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 SosTravel SPA will offset losses from the drop in SosTravel SPA's long position.

The idea behind MakeMyTrip Limited and SosTravel SPA 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.