Correlation Between China BlueChemical and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both China BlueChemical 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 China BlueChemical and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and MELIA HOTELS, you can compare the effects of market volatilities on China BlueChemical 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 China BlueChemical with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and MELIA HOTELS.
Diversification Opportunities for China BlueChemical and MELIA HOTELS
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and MELIA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and China BlueChemical 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 China BlueChemical 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 China BlueChemical i.e., China BlueChemical and MELIA HOTELS go up and down completely randomly.
Pair Corralation between China BlueChemical and MELIA HOTELS
Assuming the 90 days horizon China BlueChemical is expected to generate 1.95 times more return on investment than MELIA HOTELS. However, China BlueChemical is 1.95 times more volatile than MELIA HOTELS. It trades about 0.08 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.03 per unit of risk. If you would invest 24.00 in China BlueChemical on October 30, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. MELIA HOTELS
Performance |
| Timeline |
| China BlueChemical |
| MELIA HOTELS |
China BlueChemical and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and MELIA HOTELS
The main advantage of trading using opposite China BlueChemical and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical 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.| China BlueChemical vs. ADRIATIC METALS LS 013355 | China BlueChemical vs. DISTRICT METALS | China BlueChemical vs. Nippon Light Metal | China BlueChemical vs. Martin Marietta Materials |
| MELIA HOTELS vs. UPDATE SOFTWARE | MELIA HOTELS vs. Kingdee International Software | MELIA HOTELS vs. Mount Gibson Iron | MELIA HOTELS vs. RELIANCE STEEL AL |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |