Correlation Between MEDICAL FACILITIES and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Meli 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 MEDICAL FACILITIES and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Meli Hotels International, you can compare the effects of market volatilities on MEDICAL FACILITIES and Meli 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 MEDICAL FACILITIES with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Meli Hotels.
Diversification Opportunities for MEDICAL FACILITIES and Meli Hotels
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MEDICAL and Meli is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Meli Hotels go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Meli Hotels
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.61 times more return on investment than Meli Hotels. However, MEDICAL FACILITIES is 1.61 times more volatile than Meli Hotels International. It trades about 0.22 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.1 per unit of risk. If you would invest 955.00 in MEDICAL FACILITIES NEW on August 30, 2024 and sell it today you would earn a total of 115.00 from holding MEDICAL FACILITIES NEW or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Meli Hotels International
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Meli Hotels International |
MEDICAL FACILITIES and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Meli Hotels
The main advantage of trading using opposite MEDICAL FACILITIES and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, Meli 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| MEDICAL FACILITIES vs. AM EAGLE OUTFITTERS | MEDICAL FACILITIES vs. Genco Shipping Trading | MEDICAL FACILITIES vs. Liberty Broadband | MEDICAL FACILITIES vs. Gaztransport Technigaz SA |
| Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. ACCOR SPADR NEW | Meli Hotels vs. Choice Hotels International |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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