Correlation Between Gaming Realms and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Melia Hotels, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Melia Hotels.
Diversification Opportunities for Gaming Realms and Melia Hotels
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gaming and Melia is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and Melia Hotels go up and down completely randomly.
Pair Corralation between Gaming Realms and Melia Hotels
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 1.51 times more return on investment than Melia Hotels. However, Gaming Realms is 1.51 times more volatile than Melia Hotels. It trades about 0.04 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.03 per unit of risk. If you would invest 2,695 in Gaming Realms plc on October 12, 2024 and sell it today you would earn a total of 905.00 from holding Gaming Realms plc or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Realms plc vs. Melia Hotels
Performance |
| Timeline |
| Gaming Realms plc |
| Melia Hotels |
Gaming Realms and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Melia Hotels
The main advantage of trading using opposite Gaming Realms and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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.| Gaming Realms vs. Accesso Technology Group | Gaming Realms vs. Aptitude Software Group | Gaming Realms vs. Pfeiffer Vacuum Technology | Gaming Realms vs. GoldMining |
| Melia Hotels vs. MoneysupermarketCom Group PLC | Melia Hotels vs. Sparebank 1 SR | Melia Hotels vs. Erste Group Bank | Melia Hotels vs. Ameriprise Financial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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