Correlation Between Meli Hotels and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Heidelberg Materials 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 Heidelberg Materials 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 Heidelberg Materials AG, you can compare the effects of market volatilities on Meli Hotels and Heidelberg Materials 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Heidelberg Materials.
Diversification Opportunities for Meli Hotels and Heidelberg Materials
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Meli and Heidelberg is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Meli Hotels i.e., Meli Hotels and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Meli Hotels and Heidelberg Materials
Assuming the 90 days horizon Meli Hotels is expected to generate 2.41 times less return on investment than Heidelberg Materials. But when comparing it to its historical volatility, Meli Hotels International is 3.14 times less risky than Heidelberg Materials. It trades about 0.18 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12,965 in Heidelberg Materials AG on November 18, 2024 and sell it today you would earn a total of 1,820 from holding Heidelberg Materials AG or generate 14.04% 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. Heidelberg Materials AG
Performance |
| Timeline |
| Meli Hotels International |
| Heidelberg Materials |
Meli Hotels and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Heidelberg Materials
The main advantage of trading using opposite Meli Hotels and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| Meli Hotels vs. CITIC Telecom International | Meli Hotels vs. Martin Marietta Materials | Meli Hotels vs. Rayonier Advanced Materials | Meli Hotels vs. Plastic Omnium |
| Heidelberg Materials vs. HYATT HOTELS A | Heidelberg Materials vs. Insteel Industries | Heidelberg Materials vs. BlueScope Steel Limited | Heidelberg Materials vs. Daido Steel Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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