Correlation Between AcadeMedia and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both AcadeMedia and Melia Hotels 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 AcadeMedia and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and Melia Hotels, you can compare the effects of market volatilities on AcadeMedia and Melia Hotels 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 AcadeMedia with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Melia Hotels.
Diversification Opportunities for AcadeMedia and Melia Hotels
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AcadeMedia and Melia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of AcadeMedia i.e., AcadeMedia and Melia Hotels go up and down completely randomly.
Pair Corralation between AcadeMedia and Melia Hotels
Assuming the 90 days trading horizon AcadeMedia AB is expected to generate 0.95 times more return on investment than Melia Hotels. However, AcadeMedia AB is 1.05 times less risky than Melia Hotels. It trades about 0.08 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.07 per unit of risk. If you would invest 4,793 in AcadeMedia AB on September 14, 2024 and sell it today you would earn a total of 1,777 from holding AcadeMedia AB or generate 37.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
AcadeMedia AB vs. Melia Hotels
Performance |
| Timeline |
| AcadeMedia AB |
| Melia Hotels |
AcadeMedia and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and Melia Hotels
The main advantage of trading using opposite AcadeMedia and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia position performs unexpectedly, Melia Hotels 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| AcadeMedia vs. Indutrade AB | AcadeMedia vs. Panther Metals PLC | AcadeMedia vs. Jacquet Metal Service | AcadeMedia vs. AMG Advanced Metallurgical |
| Melia Hotels vs. Silvercorp Metals | Melia Hotels vs. Gaztransport et Technigaz | Melia Hotels vs. Evolution Gaming Group | Melia Hotels vs. Wheaton Precious Metals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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