Correlation Between Meli Hotels and DALATA HOTEL
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and DALATA HOTEL 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 DALATA HOTEL 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 DALATA HOTEL, you can compare the effects of market volatilities on Meli Hotels and DALATA HOTEL 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 DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and DALATA HOTEL.
Diversification Opportunities for Meli Hotels and DALATA HOTEL
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meli and DALATA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of Meli Hotels i.e., Meli Hotels and DALATA HOTEL go up and down completely randomly.
Pair Corralation between Meli Hotels and DALATA HOTEL
Assuming the 90 days horizon Meli Hotels is expected to generate 2.21 times less return on investment than DALATA HOTEL. But when comparing it to its historical volatility, Meli Hotels International is 1.24 times less risky than DALATA HOTEL. It trades about 0.04 of its potential returns per unit of risk. DALATA HOTEL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 414.00 in DALATA HOTEL on October 26, 2024 and sell it today you would earn a total of 19.00 from holding DALATA HOTEL or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. DALATA HOTEL
Performance |
| Timeline |
| Meli Hotels International |
| DALATA HOTEL |
Meli Hotels and DALATA HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and DALATA HOTEL
The main advantage of trading using opposite Meli Hotels and DALATA HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, DALATA HOTEL 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 DALATA HOTEL will offset losses from the drop in DALATA HOTEL's long position.| Meli Hotels vs. American Eagle Outfitters | Meli Hotels vs. Vishay Intertechnology | Meli Hotels vs. Micron Technology | Meli Hotels vs. Wayside Technology Group |
| DALATA HOTEL vs. Coor Service Management | DALATA HOTEL vs. CeoTronics AG | DALATA HOTEL vs. AGF Management Limited | DALATA HOTEL vs. Meli Hotels International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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