Correlation Between Hilton Worldwide and MakeMyTrip

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

By analyzing existing cross correlation between Hilton Worldwide Holdings and MakeMyTrip Limited, you can compare the effects of market volatilities on Hilton Worldwide 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 Hilton Worldwide with a short position of MakeMyTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and MakeMyTrip.

Diversification Opportunities for Hilton Worldwide and MakeMyTrip

0.75

Correlation Coefficient

Hilton Worldwide  MakeMyTrip

Poor diversification

The 3 months correlation between Hilton and MakeMyTrip is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and MakeMyTrip go up and down completely randomly.

Pair Corralation between Hilton Worldwide and MakeMyTrip

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to under-perform the MakeMyTrip. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Worldwide Holdings is 2.71 times less risky than MakeMyTrip. The stock trades about -0.22 of its potential returns per unit of risk. The MakeMyTrip Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,206  in MakeMyTrip Limited on February 3, 2024 and sell it today you would earn a total of  25.00  from holding MakeMyTrip Limited or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hilton Worldwide Holdings  vs.  MakeMyTrip Limited

Hilton Worldwide Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Hilton Worldwide is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

MakeMyTrip Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 10 (%) 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.

Pair Trading with Hilton Worldwide and MakeMyTrip

The main advantage of trading using opposite Hilton Worldwide and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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.

The idea behind Hilton Worldwide Holdings 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.