Correlation Between Meli Hotels and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Aegean Airlines 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 Meli Hotels and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and Aegean Airlines SA, you can compare the effects of market volatilities on Meli Hotels and Aegean Airlines 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 Meli Hotels with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Aegean Airlines.
Diversification Opportunities for Meli Hotels and Aegean Airlines
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Meli and Aegean is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Meli Hotels 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 Meli Hotels International are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Meli Hotels i.e., Meli Hotels and Aegean Airlines go up and down completely randomly.
Pair Corralation between Meli Hotels and Aegean Airlines
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.75 times more return on investment than Aegean Airlines. However, Meli Hotels International is 1.33 times less risky than Aegean Airlines. It trades about 0.02 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.01 per unit of risk. If you would invest 626.00 in Meli Hotels International on August 28, 2024 and sell it today you would earn a total of 62.00 from holding Meli Hotels International or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Aegean Airlines SA
Performance |
| Timeline |
| Meli Hotels International |
| Aegean Airlines SA |
Meli Hotels and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Aegean Airlines
The main advantage of trading using opposite Meli Hotels and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.The idea behind Meli Hotels International and Aegean Airlines SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aegean Airlines vs. Zoom Video Communications | Aegean Airlines vs. Singapore Telecommunications Limited | Aegean Airlines vs. Ribbon Communications | Aegean Airlines vs. AWILCO DRILLING PLC |
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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