Correlation Between Meli Hotels and Autohome
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Autohome 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 Autohome 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 Autohome ADR, you can compare the effects of market volatilities on Meli Hotels and Autohome 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 Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Autohome.
Diversification Opportunities for Meli Hotels and Autohome
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Meli and Autohome is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR 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 Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of Meli Hotels i.e., Meli Hotels and Autohome go up and down completely randomly.
Pair Corralation between Meli Hotels and Autohome
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.71 times more return on investment than Autohome. However, Meli Hotels International is 1.41 times less risky than Autohome. It trades about 0.07 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.03 per unit of risk. If you would invest 507.00 in Meli Hotels International on August 25, 2024 and sell it today you would earn a total of 183.00 from holding Meli Hotels International or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Autohome ADR
Performance |
| Timeline |
| Meli Hotels International |
| Autohome ADR |
Meli Hotels and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Autohome
The main advantage of trading using opposite Meli Hotels and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| Meli Hotels vs. Zoom Video Communications | Meli Hotels vs. Warner Music Group | Meli Hotels vs. National Beverage Corp | Meli Hotels vs. Evolution Mining Limited |
| Autohome vs. Microbot Medical | Autohome vs. Apollo Medical Holdings | Autohome vs. Meli Hotels International | Autohome vs. Dalata Hotel Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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