Correlation Between Meliá Hotels and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals, you can compare the effects of market volatilities on Meliá Hotels and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Mitsui Chemicals.
Diversification Opportunities for Meliá Hotels and Mitsui Chemicals
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meliá and Mitsui is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Meliá Hotels and Mitsui Chemicals
Assuming the 90 days horizon Meliá Hotels is expected to generate 1.02 times less return on investment than Mitsui Chemicals. In addition to that, Meliá Hotels is 1.2 times more volatile than Mitsui Chemicals. It trades about 0.03 of its total potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.04 per unit of volatility. If you would invest 2,100 in Mitsui Chemicals on December 1, 2024 and sell it today you would earn a total of 20.00 from holding Mitsui Chemicals or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Mitsui Chemicals
Performance |
| Timeline |
| Meli Hotels International |
| Mitsui Chemicals |
Meliá Hotels and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Mitsui Chemicals
The main advantage of trading using opposite Meliá Hotels and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| Meliá Hotels vs. PLANT VEDA FOODS | Meliá Hotels vs. US Foods Holding | Meliá Hotels vs. DaChan Food Limited | Meliá Hotels vs. EBRO FOODS |
| Mitsui Chemicals vs. Spirent Communications plc | Mitsui Chemicals vs. Canon Marketing Japan | Mitsui Chemicals vs. Retail Estates NV | Mitsui Chemicals vs. Tower One Wireless |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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