Correlation Between Melia Hotels and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Gamma Communications 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 Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Gamma Communications PLC, you can compare the effects of market volatilities on Melia Hotels and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Gamma Communications.
Diversification Opportunities for Melia Hotels and Gamma Communications
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Gamma is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Melia Hotels i.e., Melia Hotels and Gamma Communications go up and down completely randomly.
Pair Corralation between Melia Hotels and Gamma Communications
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.03 times more return on investment than Gamma Communications. However, Melia Hotels is 1.03 times more volatile than Gamma Communications PLC. It trades about 0.15 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.13 per unit of risk. If you would invest 653.00 in Melia Hotels on October 7, 2024 and sell it today you would earn a total of 76.00 from holding Melia Hotels or generate 11.64% 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. Gamma Communications PLC
Performance |
| Timeline |
| Melia Hotels |
| Gamma Communications PLC |
Melia Hotels and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Gamma Communications
The main advantage of trading using opposite Melia Hotels and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Melia Hotels vs. Blackstone Loan Financing | Melia Hotels vs. Qurate Retail Series | Melia Hotels vs. Arrow Electronics | Melia Hotels vs. Automatic Data Processing |
| Gamma Communications vs. Sovereign Metals | Gamma Communications vs. Auto Trader Group | Gamma Communications vs. Flow Traders NV | Gamma Communications vs. Empire Metals Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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