Correlation Between MELIA HOTELS and Capgemini
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Capgemini 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 Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Capgemini SE, you can compare the effects of market volatilities on MELIA HOTELS and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Capgemini.
Diversification Opportunities for MELIA HOTELS and Capgemini
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and Capgemini is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Capgemini go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Capgemini
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.46 times more return on investment than Capgemini. However, MELIA HOTELS is 1.46 times more volatile than Capgemini SE. It trades about 0.06 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.05 per unit of risk. If you would invest 699.00 in MELIA HOTELS on October 11, 2024 and sell it today you would earn a total of 25.00 from holding MELIA HOTELS or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
MELIA HOTELS vs. Capgemini SE
Performance |
| Timeline |
| MELIA HOTELS |
| Capgemini SE |
MELIA HOTELS and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Capgemini
The main advantage of trading using opposite MELIA HOTELS and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| MELIA HOTELS vs. Scottish Mortgage Investment | MELIA HOTELS vs. New Residential Investment | MELIA HOTELS vs. DIVERSIFIED ROYALTY | MELIA HOTELS vs. CHEMICAL INDUSTRIES |
| Capgemini vs. STEEL DYNAMICS | Capgemini vs. Nippon Steel | Capgemini vs. Aegean Airlines SA | Capgemini vs. Insteel Industries |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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