Correlation Between Meli Hotels and RCS MediaGroup
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and RCS MediaGroup 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 RCS MediaGroup 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 RCS MediaGroup SpA, you can compare the effects of market volatilities on Meli Hotels and RCS MediaGroup 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 RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and RCS MediaGroup.
Diversification Opportunities for Meli Hotels and RCS MediaGroup
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meli and RCS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA 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 RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of Meli Hotels i.e., Meli Hotels and RCS MediaGroup go up and down completely randomly.
Pair Corralation between Meli Hotels and RCS MediaGroup
Assuming the 90 days horizon Meli Hotels International is expected to under-perform the RCS MediaGroup. But the stock apears to be less risky and, when comparing its historical volatility, Meli Hotels International is 1.8 times less risky than RCS MediaGroup. The stock trades about -0.09 of its potential returns per unit of risk. The RCS MediaGroup SpA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 85.00 in RCS MediaGroup SpA on October 31, 2024 and sell it today you would earn a total of 2.00 from holding RCS MediaGroup SpA or generate 2.35% 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. RCS MediaGroup SpA
Performance |
| Timeline |
| Meli Hotels International |
| RCS MediaGroup SpA |
Meli Hotels and RCS MediaGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and RCS MediaGroup
The main advantage of trading using opposite Meli Hotels and RCS MediaGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, RCS MediaGroup 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 RCS MediaGroup will offset losses from the drop in RCS MediaGroup's long position.| Meli Hotels vs. USWE SPORTS AB | Meli Hotels vs. UPDATE SOFTWARE | Meli Hotels vs. PKSHA TECHNOLOGY INC | Meli Hotels vs. Easy Software AG |
| RCS MediaGroup vs. Goodyear Tire Rubber | RCS MediaGroup vs. ANGLO ASIAN MINING | RCS MediaGroup vs. SANOK RUBBER ZY | RCS MediaGroup vs. Monument Mining Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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