Correlation Between Melia Hotels and BYD
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and BYD 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 BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and BYD Co, you can compare the effects of market volatilities on Melia Hotels and BYD 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 BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and BYD.
Diversification Opportunities for Melia Hotels and BYD
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Melia and BYD is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co 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 BYD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Melia Hotels i.e., Melia Hotels and BYD go up and down completely randomly.
Pair Corralation between Melia Hotels and BYD
Assuming the 90 days trading horizon Melia Hotels is expected to generate 11.93 times less return on investment than BYD. But when comparing it to its historical volatility, Melia Hotels is 10.24 times less risky than BYD. It trades about 0.04 of its potential returns per unit of risk. BYD Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,505 in BYD Co on September 3, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. BYD Co
Performance |
| Timeline |
| Melia Hotels |
| BYD Co |
Melia Hotels and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and BYD
The main advantage of trading using opposite Melia Hotels and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, BYD 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 BYD will offset losses from the drop in BYD's long position.| Melia Hotels vs. Catalyst Media Group | Melia Hotels vs. CATLIN GROUP | Melia Hotels vs. Magnora ASA | Melia Hotels vs. RTW Venture Fund |
| BYD vs. Melia Hotels | BYD vs. Leroy Seafood Group | BYD vs. Take Two Interactive Software | BYD vs. Tyson Foods Cl |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |