Correlation Between MELIA HOTELS and ASSOC BR
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and ASSOC BR 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 ASSOC BR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and ASSOC BR FOODS, you can compare the effects of market volatilities on MELIA HOTELS and ASSOC BR 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 ASSOC BR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and ASSOC BR.
Diversification Opportunities for MELIA HOTELS and ASSOC BR
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and ASSOC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and ASSOC BR FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSOC BR FOODS 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 ASSOC BR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSOC BR FOODS has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and ASSOC BR go up and down completely randomly.
Pair Corralation between MELIA HOTELS and ASSOC BR
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.4 times more return on investment than ASSOC BR. However, MELIA HOTELS is 1.4 times more volatile than ASSOC BR FOODS. It trades about 0.04 of its potential returns per unit of risk. ASSOC BR FOODS is currently generating about 0.03 per unit of risk. If you would invest 552.00 in MELIA HOTELS on October 13, 2024 and sell it today you would earn a total of 162.00 from holding MELIA HOTELS or generate 29.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
MELIA HOTELS vs. ASSOC BR FOODS
Performance |
| Timeline |
| MELIA HOTELS |
| ASSOC BR FOODS |
MELIA HOTELS and ASSOC BR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and ASSOC BR
The main advantage of trading using opposite MELIA HOTELS and ASSOC BR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, ASSOC BR 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 ASSOC BR will offset losses from the drop in ASSOC BR's long position.| MELIA HOTELS vs. Yanzhou Coal Mining | MELIA HOTELS vs. USWE SPORTS AB | MELIA HOTELS vs. Playtech plc | MELIA HOTELS vs. Endeavour Mining PLC |
| ASSOC BR vs. SENECA FOODS A | ASSOC BR vs. Park Hotels Resorts | ASSOC BR vs. The Hongkong and | ASSOC BR vs. MELIA HOTELS |
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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