Correlation Between Meliá Hotels and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and INFORMATION SVC 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 INFORMATION SVC 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 INFORMATION SVC GRP, you can compare the effects of market volatilities on Meliá Hotels and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and INFORMATION SVC.
Diversification Opportunities for Meliá Hotels and INFORMATION SVC
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Meliá and INFORMATION is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and INFORMATION SVC go up and down completely randomly.
Pair Corralation between Meliá Hotels and INFORMATION SVC
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.68 times more return on investment than INFORMATION SVC. However, Meli Hotels International is 1.48 times less risky than INFORMATION SVC. It trades about -0.03 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about -0.07 per unit of risk. If you would invest 729.00 in Meli Hotels International on November 30, 2024 and sell it today you would lose (16.00) from holding Meli Hotels International or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. INFORMATION SVC GRP
Performance |
| Timeline |
| Meli Hotels International |
| INFORMATION SVC GRP |
Meliá Hotels and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and INFORMATION SVC
The main advantage of trading using opposite Meliá Hotels and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's 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 |
| INFORMATION SVC vs. Guangdong Investment Limited | INFORMATION SVC vs. Constellation Software | INFORMATION SVC vs. New Residential Investment | INFORMATION SVC vs. Kingdee International Software |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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