Correlation Between Advanced Medical and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Advanced Medical 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 Advanced Medical and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Medical Solutions and Meli Hotels International, you can compare the effects of market volatilities on Advanced Medical 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 Advanced Medical with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Meliá Hotels.
Diversification Opportunities for Advanced Medical and Meliá Hotels
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Meliá is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions 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 Advanced Medical 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 Advanced Medical Solutions 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 Advanced Medical i.e., Advanced Medical and Meliá Hotels go up and down completely randomly.
Pair Corralation between Advanced Medical and Meliá Hotels
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 2.13 times more return on investment than Meliá Hotels. However, Advanced Medical is 2.13 times more volatile than Meli Hotels International. It trades about 0.07 of its potential returns per unit of risk. Meli Hotels International is currently generating about -0.07 per unit of risk. If you would invest 230.00 in Advanced Medical Solutions on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Advanced Medical Solutions or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Meli Hotels International
Performance |
| Timeline |
| Advanced Medical Sol |
| Meli Hotels International |
Advanced Medical and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Meliá Hotels
The main advantage of trading using opposite Advanced Medical and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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.| Advanced Medical vs. Acadia Healthcare | Advanced Medical vs. Genertec Universal Medical | Advanced Medical vs. Universal Health Realty | Advanced Medical vs. Planet Fitness |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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