Correlation Between Melia Hotels and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and LPKF Laser 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 Melia Hotels and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and LPKF Laser Electronics, you can compare the effects of market volatilities on Melia Hotels and LPKF Laser 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 Melia Hotels with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and LPKF Laser.
Diversification Opportunities for Melia Hotels and LPKF Laser
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and LPKF is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Melia Hotels 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 Melia Hotels are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Melia Hotels i.e., Melia Hotels and LPKF Laser go up and down completely randomly.
Pair Corralation between Melia Hotels and LPKF Laser
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.81 times more return on investment than LPKF Laser. However, Melia Hotels is 1.24 times less risky than LPKF Laser. It trades about 0.06 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.04 per unit of risk. If you would invest 604.00 in Melia Hotels on September 12, 2024 and sell it today you would earn a total of 139.00 from holding Melia Hotels or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. LPKF Laser Electronics
Performance |
| Timeline |
| Melia Hotels |
| LPKF Laser Electronics |
Melia Hotels and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and LPKF Laser
The main advantage of trading using opposite Melia Hotels and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Melia Hotels vs. Hong Kong Land | Melia Hotels vs. Neometals | Melia Hotels vs. Coor Service Management | Melia Hotels vs. Fidelity Sustainable USD |
| LPKF Laser vs. Hong Kong Land | LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Fidelity Sustainable USD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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