Correlation Between HeidelbergCement and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and Meli 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 HeidelbergCement and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeidelbergCement AG and Meli Hotels International, you can compare the effects of market volatilities on HeidelbergCement and Meli 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 HeidelbergCement with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and Meli Hotels.
Diversification Opportunities for HeidelbergCement and Meli Hotels
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HeidelbergCement and Meli is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and HeidelbergCement 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 HeidelbergCement AG are associated (or correlated) with Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and Meli Hotels go up and down completely randomly.
Pair Corralation between HeidelbergCement and Meli Hotels
Assuming the 90 days horizon HeidelbergCement AG is expected to generate 0.86 times more return on investment than Meli Hotels. However, HeidelbergCement AG is 1.17 times less risky than Meli Hotels. It trades about 0.14 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.06 per unit of risk. If you would invest 7,085 in HeidelbergCement AG on August 24, 2024 and sell it today you would earn a total of 4,720 from holding HeidelbergCement AG or generate 66.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HeidelbergCement AG vs. Meli Hotels International
Performance |
| Timeline |
| HeidelbergCement |
| Meli Hotels International |
HeidelbergCement and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeidelbergCement and Meli Hotels
The main advantage of trading using opposite HeidelbergCement and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeidelbergCement position performs unexpectedly, Meli 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| HeidelbergCement vs. Vulcan Materials | HeidelbergCement vs. Origin Agritech | HeidelbergCement vs. SIVERS SEMICONDUCTORS AB | HeidelbergCement vs. Talanx AG |
| Meli Hotels vs. MOLSON RS BEVERAGE | Meli Hotels vs. International Consolidated Airlines | Meli Hotels vs. THAI BEVERAGE | Meli Hotels vs. Cal Maine Foods |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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