Correlation Between Uniper SE and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Uniper SE 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 Uniper SE and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniper SE and Melia Hotels, you can compare the effects of market volatilities on Uniper SE 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 Uniper SE with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and Melia Hotels.
Diversification Opportunities for Uniper SE and Melia Hotels
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Uniper and Melia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Uniper SE 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 Uniper SE 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 Uniper SE i.e., Uniper SE and Melia Hotels go up and down completely randomly.
Pair Corralation between Uniper SE and Melia Hotels
Assuming the 90 days trading horizon Uniper SE is expected to under-perform the Melia Hotels. In addition to that, Uniper SE is 1.7 times more volatile than Melia Hotels. It trades about -0.03 of its total potential returns per unit of risk. Melia Hotels is currently generating about -0.02 per unit of volatility. If you would invest 722.00 in Melia Hotels on September 3, 2024 and sell it today you would lose (45.00) from holding Melia Hotels or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniper SE vs. Melia Hotels
Performance |
| Timeline |
| Uniper SE |
| Melia Hotels |
Uniper SE and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniper SE and Melia Hotels
The main advantage of trading using opposite Uniper SE and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE 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.| Uniper SE vs. Bytes Technology | Uniper SE vs. Livermore Investments Group | Uniper SE vs. FC Investment Trust | Uniper SE vs. Universal Display Corp |
| Melia Hotels vs. Catalyst Media Group | Melia Hotels vs. CATLIN GROUP | Melia Hotels vs. Magnora ASA | Melia Hotels vs. RTW Venture Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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