Correlation Between Melia Hotels and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Naturhouse Health 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 Naturhouse Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Naturhouse Health SA, you can compare the effects of market volatilities on Melia Hotels and Naturhouse Health 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 Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Naturhouse Health.
Diversification Opportunities for Melia Hotels and Naturhouse Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melia and Naturhouse is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health 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 Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Melia Hotels i.e., Melia Hotels and Naturhouse Health go up and down completely randomly.
Pair Corralation between Melia Hotels and Naturhouse Health
Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Naturhouse Health. But the stock apears to be less risky and, when comparing its historical volatility, Melia Hotels is 1.13 times less risky than Naturhouse Health. The stock trades about -0.1 of its potential returns per unit of risk. The Naturhouse Health SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 167.00 in Naturhouse Health SA on November 3, 2024 and sell it today you would earn a total of 5.00 from holding Naturhouse Health SA or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Melia Hotels vs. Naturhouse Health SA
Performance |
| Timeline |
| Melia Hotels |
| Naturhouse Health |
Melia Hotels and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Naturhouse Health
The main advantage of trading using opposite Melia Hotels and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Naturhouse Health 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Global Net Lease | Melia Hotels vs. Gamma Communications PLC | Melia Hotels vs. Universal Music Group |
| Naturhouse Health vs. AMG Advanced Metallurgical | Naturhouse Health vs. Rheinmetall AG | Naturhouse Health vs. GoldMining | Naturhouse Health vs. UNIQA Insurance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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