Correlation Between MELIA HOTELS and MITSUBISHI STEEL
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and MITSUBISHI STEEL 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 MELIA HOTELS and MITSUBISHI STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and MITSUBISHI STEEL MFG, you can compare the effects of market volatilities on MELIA HOTELS and MITSUBISHI STEEL 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 MELIA HOTELS with a short position of MITSUBISHI STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and MITSUBISHI STEEL.
Diversification Opportunities for MELIA HOTELS and MITSUBISHI STEEL
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and MITSUBISHI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and MITSUBISHI STEEL MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUBISHI STEEL MFG and MELIA 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 MELIA HOTELS are associated (or correlated) with MITSUBISHI STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUBISHI STEEL MFG has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and MITSUBISHI STEEL go up and down completely randomly.
Pair Corralation between MELIA HOTELS and MITSUBISHI STEEL
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 5.63 times less return on investment than MITSUBISHI STEEL. But when comparing it to its historical volatility, MELIA HOTELS is 1.09 times less risky than MITSUBISHI STEEL. It trades about 0.06 of its potential returns per unit of risk. MITSUBISHI STEEL MFG is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 785.00 in MITSUBISHI STEEL MFG on August 28, 2024 and sell it today you would earn a total of 75.00 from holding MITSUBISHI STEEL MFG or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. MITSUBISHI STEEL MFG
Performance |
| Timeline |
| MELIA HOTELS |
| MITSUBISHI STEEL MFG |
MELIA HOTELS and MITSUBISHI STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and MITSUBISHI STEEL
The main advantage of trading using opposite MELIA HOTELS and MITSUBISHI STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, MITSUBISHI STEEL 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 MITSUBISHI STEEL will offset losses from the drop in MITSUBISHI STEEL's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Microsoft |
| MITSUBISHI STEEL vs. Lion One Metals | MITSUBISHI STEEL vs. Aluminum of | MITSUBISHI STEEL vs. SLR Investment Corp | MITSUBISHI STEEL vs. ARDAGH METAL PACDL 0001 |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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