Correlation Between Meliá Hotels and Datang International
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Datang International 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 Meliá Hotels and Datang International 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 Datang International Power, you can compare the effects of market volatilities on Meliá Hotels and Datang International 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 Meliá Hotels with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Datang International.
Diversification Opportunities for Meliá Hotels and Datang International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meliá and Datang is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Meliá 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Datang International go up and down completely randomly.
Pair Corralation between Meliá Hotels and Datang International
Assuming the 90 days horizon Meliá Hotels is expected to generate 1.05 times less return on investment than Datang International. But when comparing it to its historical volatility, Meli Hotels International is 2.69 times less risky than Datang International. It trades about 0.05 of its potential returns per unit of risk. Datang International Power is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Datang International Power on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Datang International Power or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Datang International Power
Performance |
| Timeline |
| Meli Hotels International |
| Datang International |
Meliá Hotels and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Datang International
The main advantage of trading using opposite Meliá Hotels and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| Meliá Hotels vs. REMEDY ENTERTAINMENT OYJ | Meliá Hotels vs. SALESFORCE INC CDR | Meliá Hotels vs. LINMON MEDIA LTD | Meliá Hotels vs. PRECISION DRILLING P |
| Datang International vs. GUILD ESPORTS PLC | Datang International vs. Columbia Sportswear | Datang International vs. Yuexiu Transport Infrastructure | Datang International vs. Gaztransport et technigaz |
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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