Correlation Between Meli Hotels and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and CarsalesCom 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 CarsalesCom 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 CarsalesCom, you can compare the effects of market volatilities on Meli Hotels and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and CarsalesCom.
Diversification Opportunities for Meli Hotels and CarsalesCom
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meli and CarsalesCom is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Meli Hotels i.e., Meli Hotels and CarsalesCom go up and down completely randomly.
Pair Corralation between Meli Hotels and CarsalesCom
Assuming the 90 days horizon Meli Hotels is expected to generate 2.85 times less return on investment than CarsalesCom. In addition to that, Meli Hotels is 1.11 times more volatile than CarsalesCom. It trades about 0.03 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.08 per unit of volatility. If you would invest 1,328 in CarsalesCom on October 27, 2024 and sell it today you would earn a total of 1,012 from holding CarsalesCom or generate 76.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Meli Hotels International vs. CarsalesCom
Performance |
| Timeline |
| Meli Hotels International |
| CarsalesCom |
Meli Hotels and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and CarsalesCom
The main advantage of trading using opposite Meli Hotels and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Meli Hotels vs. Nucletron Electronic Aktiengesellschaft | Meli Hotels vs. Methode Electronics | Meli Hotels vs. KIMBALL ELECTRONICS | Meli Hotels vs. Meiko Electronics Co |
| CarsalesCom vs. Eidesvik Offshore ASA | CarsalesCom vs. Nomad Foods | CarsalesCom vs. CN MODERN DAIRY | CarsalesCom vs. Luckin Coffee |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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