Correlation Between New Momentum and Tuniu Corp

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

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

Diversification Opportunities for New Momentum and Tuniu Corp

0.2

Correlation Coefficient

New Momentum  Tuniu Corp

Modest diversification

The 3 months correlation between New and Tuniu is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding New Momentum and Tuniu Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuniu Corp and New Momentum 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 New Momentum 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 New Momentum i.e., New Momentum and Tuniu Corp go up and down completely randomly.

Pair Corralation between New Momentum and Tuniu Corp

Given the investment horizon of 90 days New Momentum is expected to generate 1.83 times more return on investment than Tuniu Corp. However, New Momentum is 1.83 times more volatile than Tuniu Corp. It trades about 0.04 of its potential returns per unit of risk. Tuniu Corp is currently generating about 0.04 per unit of risk. If you would invest  0.06  in New Momentum on September 26, 2024 and sell it today you would lose (0.01) from holding New Momentum or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

New Momentum  vs.  Tuniu Corp

New Momentum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Momentum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, New Momentum showed solid returns over the last few months and may actually be approaching a breakup point.

Tuniu Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tuniu Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tuniu Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Momentum and Tuniu Corp

The main advantage of trading using opposite New Momentum and Tuniu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Momentum 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 New Momentum 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.