Correlation Between USWE SPORTS and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Meliá 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 USWE SPORTS and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Meli Hotels International, you can compare the effects of market volatilities on USWE SPORTS and Meliá 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 USWE SPORTS with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Meliá Hotels.
Diversification Opportunities for USWE SPORTS and Meliá Hotels
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USWE and Meliá is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB 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 USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with Meliá 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 USWE SPORTS i.e., USWE SPORTS and Meliá Hotels go up and down completely randomly.
Pair Corralation between USWE SPORTS and Meliá Hotels
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the Meliá Hotels. In addition to that, USWE SPORTS is 1.74 times more volatile than Meli Hotels International. It trades about -0.05 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.04 per unit of volatility. If you would invest 621.00 in Meli Hotels International on November 8, 2024 and sell it today you would earn a total of 103.00 from holding Meli Hotels International or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. Meli Hotels International
Performance |
| Timeline |
| USWE SPORTS AB |
| Meli Hotels International |
USWE SPORTS and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Meliá Hotels
The main advantage of trading using opposite USWE SPORTS and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| USWE SPORTS vs. Transport International Holdings | USWE SPORTS vs. Penn National Gaming | USWE SPORTS vs. Fukuyama Transporting Co | USWE SPORTS vs. PLAYMATES TOYS |
| Meliá Hotels vs. Hua Hong Semiconductor | Meliá Hotels vs. Xinhua Winshare Publishing | Meliá Hotels vs. Magnachip Semiconductor | Meliá Hotels vs. MagnaChip Semiconductor Corp |
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.
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