Correlation Between Mondee Holdings and MakeMyTrip

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

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

Diversification Opportunities for Mondee Holdings and MakeMyTrip

0.01

Correlation Coefficient

Mondee Holdings  MakeMyTrip

Significant diversification

The 3 months correlation between Mondee and MakeMyTrip is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mondee Holdings and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Mondee Holdings 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 Mondee 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 Mondee Holdings i.e., Mondee Holdings and MakeMyTrip go up and down completely randomly.

Pair Corralation between Mondee Holdings and MakeMyTrip

Given the investment horizon of 90 days Mondee Holdings is expected to generate 2.91 times less return on investment than MakeMyTrip. In addition to that, Mondee Holdings is 1.49 times more volatile than MakeMyTrip Limited. It trades about 0.04 of its total potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.16 per unit of volatility. If you would invest  6,045  in MakeMyTrip Limited on February 5, 2024 and sell it today you would earn a total of  1,194  from holding MakeMyTrip Limited or generate 19.75% return on investment over 90 days.

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

Mondee Holdings  vs.  MakeMyTrip Limited

Mondee Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mondee Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Mondee Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

MakeMyTrip Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MakeMyTrip unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mondee Holdings and MakeMyTrip

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

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.