Correlation Between Compugroup Medical and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Compugroup Medical 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 Compugroup Medical and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugroup Medical SE and MELIA HOTELS, you can compare the effects of market volatilities on Compugroup Medical 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 Compugroup Medical with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and MELIA HOTELS.
Diversification Opportunities for Compugroup Medical and MELIA HOTELS
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compugroup and MELIA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Compugroup 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 Compugroup Medical SE 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 Compugroup Medical i.e., Compugroup Medical and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Compugroup Medical and MELIA HOTELS
Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the MELIA HOTELS. In addition to that, Compugroup Medical is 1.78 times more volatile than MELIA HOTELS. It trades about -0.1 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about -0.04 per unit of volatility. If you would invest 783.00 in MELIA HOTELS on September 3, 2024 and sell it today you would lose (97.00) from holding MELIA HOTELS or give up 12.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compugroup Medical SE vs. MELIA HOTELS
Performance |
| Timeline |
| Compugroup Medical |
| MELIA HOTELS |
Compugroup Medical and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compugroup Medical and MELIA HOTELS
The main advantage of trading using opposite Compugroup Medical and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugroup Medical 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's long position.| Compugroup Medical vs. ATRESMEDIA | Compugroup Medical vs. Corsair Gaming | Compugroup Medical vs. Hollywood Bowl Group | Compugroup Medical vs. RCS MediaGroup SpA |
| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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