Correlation Between NEW PACIFIC and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both NEW PACIFIC 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 NEW PACIFIC and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW PACIFIC METALS and Meli Hotels International, you can compare the effects of market volatilities on NEW PACIFIC 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 NEW PACIFIC with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW PACIFIC and Meli Hotels.
Diversification Opportunities for NEW PACIFIC and Meli Hotels
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NEW and Meli is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NEW PACIFIC METALS 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 NEW PACIFIC 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 NEW PACIFIC METALS 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 NEW PACIFIC i.e., NEW PACIFIC and Meli Hotels go up and down completely randomly.
Pair Corralation between NEW PACIFIC and Meli Hotels
Assuming the 90 days trading horizon NEW PACIFIC METALS is expected to generate 1.9 times more return on investment than Meli Hotels. However, NEW PACIFIC is 1.9 times more volatile than Meli Hotels International. It trades about 0.11 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.0 per unit of risk. If you would invest 133.00 in NEW PACIFIC METALS on September 14, 2024 and sell it today you would earn a total of 8.00 from holding NEW PACIFIC METALS or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW PACIFIC METALS vs. Meli Hotels International
Performance |
| Timeline |
| NEW PACIFIC METALS |
| Meli Hotels International |
NEW PACIFIC and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW PACIFIC and Meli Hotels
The main advantage of trading using opposite NEW PACIFIC and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW PACIFIC 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.| NEW PACIFIC vs. Superior Plus Corp | NEW PACIFIC vs. SIVERS SEMICONDUCTORS AB | NEW PACIFIC vs. Norsk Hydro ASA | NEW PACIFIC vs. Reliance Steel Aluminum |
| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
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 Correlations module to find global opportunities by holding instruments from different markets.
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