Correlation Between TUI AG and TRAINLINE PLC

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

By analyzing existing cross correlation between TUI AG and TRAINLINE PLC LS, you can compare the effects of market volatilities on TUI AG and TRAINLINE PLC 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 TUI AG with a short position of TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TUI AG and TRAINLINE PLC.

Diversification Opportunities for TUI AG and TRAINLINE PLC

0.06

Correlation Coefficient

TUI AG  TRAINLINE PLC

Significant diversification

The 3 months correlation between TUI and TRAINLINE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TUI AG and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and TUI AG 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 TUI AG are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of TUI AG i.e., TUI AG and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between TUI AG and TRAINLINE PLC

Assuming the 90 days trading horizon TUI AG is expected to generate 1.3 times more return on investment than TRAINLINE PLC. However, TUI AG is 1.3 times more volatile than TRAINLINE PLC LS. It trades about -0.01 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about -0.05 per unit of risk. If you would invest  748.00  in TUI AG on April 1, 2025 and sell it today you would lose (18.00) from holding TUI AG or give up 2.41% of portfolio value over 90 days.

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

TUI AG  vs.  TRAINLINE PLC LS

TUI AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TUI AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TUI AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TUI AG and TRAINLINE PLC

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

The idea behind TUI AG and TRAINLINE PLC LS 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.