Correlation Between Atea ASA and MakeMyTrip

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

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

Diversification Opportunities for Atea ASA and MakeMyTrip

0.87

Correlation Coefficient

Atea ASA  MakeMyTrip

Very poor diversification

The 3 months correlation between Atea and MakeMyTrip is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Atea ASA and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited and Atea ASA 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 Atea ASA 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 Atea ASA i.e., Atea ASA and MakeMyTrip go up and down completely randomly.

Pair Corralation between Atea ASA and MakeMyTrip

Assuming the 90 days trading horizon Atea ASA is expected to generate 103.1 times less return on investment than MakeMyTrip. But when comparing it to its historical volatility, Atea ASA is 1.41 times less risky than MakeMyTrip. It trades about 0.0 of its potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,355  in MakeMyTrip Limited on September 24, 2024 and sell it today you would earn a total of  665.00  from holding MakeMyTrip Limited or generate 6.42% return on investment over 90 days.

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

Atea ASA  vs.  MakeMyTrip Limited

Atea ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atea ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Atea ASA exhibited solid returns over the last few months and may actually be approaching a breakup point.

MakeMyTrip Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MakeMyTrip may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Atea ASA and MakeMyTrip

The main advantage of trading using opposite Atea ASA and MakeMyTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atea ASA 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 Atea ASA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.