Correlation Between American Lithium and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both American Lithium 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 American Lithium and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and Meli Hotels International, you can compare the effects of market volatilities on American Lithium 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 American Lithium with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Meli Hotels.
Diversification Opportunities for American Lithium and Meli Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Meli is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp 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 American Lithium 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 American Lithium Corp 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 American Lithium i.e., American Lithium and Meli Hotels go up and down completely randomly.
Pair Corralation between American Lithium and Meli Hotels
Assuming the 90 days trading horizon American Lithium Corp is expected to under-perform the Meli Hotels. In addition to that, American Lithium is 4.16 times more volatile than Meli Hotels International. It trades about -0.15 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.07 per unit of volatility. If you would invest 669.00 in Meli Hotels International on September 13, 2024 and sell it today you would earn a total of 29.00 from holding Meli Hotels International or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. Meli Hotels International
Performance |
| Timeline |
| American Lithium Corp |
| Meli Hotels International |
American Lithium and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Meli Hotels
The main advantage of trading using opposite American Lithium and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium 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.| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stocks Directory Find actively traded stocks across global markets |