Correlation Between Melia Hotels and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Prosiebensat 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 Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Prosiebensat 1 Media, you can compare the effects of market volatilities on Melia Hotels and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Prosiebensat.
Diversification Opportunities for Melia Hotels and Prosiebensat
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Prosiebensat is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Melia Hotels i.e., Melia Hotels and Prosiebensat go up and down completely randomly.
Pair Corralation between Melia Hotels and Prosiebensat
Assuming the 90 days trading horizon Melia Hotels is expected to generate 3.72 times less return on investment than Prosiebensat. But when comparing it to its historical volatility, Melia Hotels is 2.33 times less risky than Prosiebensat. It trades about 0.13 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 480.00 in Prosiebensat 1 Media on September 15, 2024 and sell it today you would earn a total of 76.00 from holding Prosiebensat 1 Media or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Melia Hotels |
| Prosiebensat 1 Media |
Melia Hotels and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Prosiebensat
The main advantage of trading using opposite Melia Hotels and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.| Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Hyundai Motor | Melia Hotels vs. Reliance Industries Ltd |
| Prosiebensat vs. Melia Hotels | Prosiebensat vs. Global Net Lease | Prosiebensat vs. Host Hotels Resorts | Prosiebensat vs. InterContinental Hotels Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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