Correlation Between Biotechnology Assets and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Biotechnology Assets and Melia 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 Biotechnology Assets and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotechnology Assets SA and Melia Hotels, you can compare the effects of market volatilities on Biotechnology Assets and Melia 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 Biotechnology Assets with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Assets and Melia Hotels.
Diversification Opportunities for Biotechnology Assets and Melia Hotels
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biotechnology and Melia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Assets SA and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Biotechnology Assets 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 Biotechnology Assets SA are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Biotechnology Assets i.e., Biotechnology Assets and Melia Hotels go up and down completely randomly.
Pair Corralation between Biotechnology Assets and Melia Hotels
Assuming the 90 days trading horizon Biotechnology Assets SA is expected to generate 2.8 times more return on investment than Melia Hotels. However, Biotechnology Assets is 2.8 times more volatile than Melia Hotels. It trades about 0.0 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.08 per unit of risk. If you would invest 35.00 in Biotechnology Assets SA on September 1, 2024 and sell it today you would lose (4.00) from holding Biotechnology Assets SA or give up 11.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biotechnology Assets SA vs. Melia Hotels
Performance |
| Timeline |
| Biotechnology Assets |
| Melia Hotels |
Biotechnology Assets and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotechnology Assets and Melia Hotels
The main advantage of trading using opposite Biotechnology Assets and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Assets position performs unexpectedly, Melia 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.The idea behind Biotechnology Assets SA and Melia Hotels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |