Correlation Between ALTER NRG and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both ALTER NRG 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 ALTER NRG and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALTER NRG and Meli Hotels International, you can compare the effects of market volatilities on ALTER NRG 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 ALTER NRG with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTER NRG and Meli Hotels.
Diversification Opportunities for ALTER NRG and Meli Hotels
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ALTER and Meli is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ALTER NRG 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 ALTER NRG 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 ALTER NRG 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 ALTER NRG i.e., ALTER NRG and Meli Hotels go up and down completely randomly.
Pair Corralation between ALTER NRG and Meli Hotels
Assuming the 90 days horizon ALTER NRG is expected to under-perform the Meli Hotels. In addition to that, ALTER NRG is 2.24 times more volatile than Meli Hotels International. It trades about -0.26 of its total potential returns per unit of risk. Meli Hotels International is currently generating about -0.03 per unit of volatility. If you would invest 692.00 in Meli Hotels International on September 5, 2024 and sell it today you would lose (9.00) from holding Meli Hotels International or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALTER NRG vs. Meli Hotels International
Performance |
| Timeline |
| ALTER NRG |
| Meli Hotels International |
ALTER NRG and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALTER NRG and Meli Hotels
The main advantage of trading using opposite ALTER NRG and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTER NRG 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.| ALTER NRG vs. Verizon Communications | ALTER NRG vs. Harmony Gold Mining | ALTER NRG vs. LION ONE METALS | ALTER NRG vs. Zoom Video Communications |
| Meli Hotels vs. FEMALE HEALTH | Meli Hotels vs. COMBA TELECOM SYST | Meli Hotels vs. Consolidated Communications Holdings | Meli Hotels vs. Spirent Communications plc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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