Correlation Between Mount Gibson and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and MELIA HOTELS, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and MELIA HOTELS.
Diversification Opportunities for Mount Gibson and MELIA HOTELS
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mount and MELIA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Mount Gibson and MELIA HOTELS
Assuming the 90 days horizon Mount Gibson Iron is expected to generate 2.28 times more return on investment than MELIA HOTELS. However, Mount Gibson is 2.28 times more volatile than MELIA HOTELS. It trades about 0.09 of its potential returns per unit of risk. MELIA HOTELS is currently generating about -0.02 per unit of risk. If you would invest 17.00 in Mount Gibson Iron on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Mount Gibson Iron or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. MELIA HOTELS
Performance |
| Timeline |
| Mount Gibson Iron |
| MELIA HOTELS |
Mount Gibson and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and MELIA HOTELS
The main advantage of trading using opposite Mount Gibson and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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.| Mount Gibson vs. PennantPark Investment | Mount Gibson vs. ATRESMEDIA | Mount Gibson vs. Keck Seng Investments | Mount Gibson vs. Fuji Media Holdings |
| MELIA HOTELS vs. Magnachip Semiconductor | MELIA HOTELS vs. Hua Hong Semiconductor | MELIA HOTELS vs. MeVis Medical Solutions | MELIA HOTELS vs. ELMOS SEMICONDUCTOR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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