Correlation Between Meli Hotels and Albemarle
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Albemarle 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 Albemarle 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 Albemarle, you can compare the effects of market volatilities on Meli Hotels and Albemarle 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 Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Albemarle.
Diversification Opportunities for Meli Hotels and Albemarle
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meli and Albemarle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Meli Hotels i.e., Meli Hotels and Albemarle go up and down completely randomly.
Pair Corralation between Meli Hotels and Albemarle
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.59 times more return on investment than Albemarle. However, Meli Hotels International is 1.69 times less risky than Albemarle. It trades about 0.12 of its potential returns per unit of risk. Albemarle is currently generating about 0.02 per unit of risk. If you would invest 718.00 in Meli Hotels International on September 16, 2024 and sell it today you would earn a total of 34.00 from holding Meli Hotels International or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Albemarle
Performance |
| Timeline |
| Meli Hotels International |
| Albemarle |
Meli Hotels and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Albemarle
The main advantage of trading using opposite Meli Hotels and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
| Albemarle vs. United Breweries Co | Albemarle vs. Charter Communications | Albemarle vs. MAROC TELECOM | Albemarle vs. Ribbon Communications |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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