Correlation Between Datang International and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Datang International 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 Datang International and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Meli Hotels International, you can compare the effects of market volatilities on Datang International 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 Datang International with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Meli Hotels.
Diversification Opportunities for Datang International and Meli Hotels
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Datang and Meli is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power 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 Datang International 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 Datang International Power 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 Datang International i.e., Datang International and Meli Hotels go up and down completely randomly.
Pair Corralation between Datang International and Meli Hotels
Assuming the 90 days horizon Datang International Power is expected to under-perform the Meli Hotels. In addition to that, Datang International is 1.6 times more volatile than Meli Hotels International. It trades about -0.2 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.11 per unit of volatility. If you would invest 669.00 in Meli Hotels International on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Meli Hotels International or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang International Power vs. Meli Hotels International
Performance |
| Timeline |
| Datang International |
| Meli Hotels International |
Datang International and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang International and Meli Hotels
The main advantage of trading using opposite Datang International and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International 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.| Datang International vs. CN YANGTPWR GDR | Datang International vs. Superior Plus Corp | Datang International vs. SIVERS SEMICONDUCTORS AB | Datang International vs. Talanx AG |
| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. ACCOR SPADR NEW | Meli Hotels vs. Choice Hotels International |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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