Correlation Between MELIA HOTELS and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and BANK RAKYAT 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 BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and BANK RAKYAT IND, you can compare the effects of market volatilities on MELIA HOTELS and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and BANK RAKYAT.
Diversification Opportunities for MELIA HOTELS and BANK RAKYAT
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and BANK is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and BANK RAKYAT go up and down completely randomly.
Pair Corralation between MELIA HOTELS and BANK RAKYAT
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.84 times more return on investment than BANK RAKYAT. However, MELIA HOTELS is 1.19 times less risky than BANK RAKYAT. It trades about 0.03 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.09 per unit of risk. If you would invest 686.00 in MELIA HOTELS on October 30, 2024 and sell it today you would earn a total of 9.00 from holding MELIA HOTELS or generate 1.31% 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. BANK RAKYAT IND
Performance |
| Timeline |
| MELIA HOTELS |
| BANK RAKYAT IND |
MELIA HOTELS and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and BANK RAKYAT
The main advantage of trading using opposite MELIA HOTELS and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| MELIA HOTELS vs. UPDATE SOFTWARE | MELIA HOTELS vs. Kingdee International Software | MELIA HOTELS vs. Mount Gibson Iron | MELIA HOTELS vs. RELIANCE STEEL AL |
| BANK RAKYAT vs. China Communications Services | BANK RAKYAT vs. HUTCHISON TELECOMM | BANK RAKYAT vs. DIVERSIFIED ROYALTY | BANK RAKYAT vs. Charter Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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