Correlation Between MELIA HOTELS and China Mobile
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and China Mobile 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 China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and China Mobile Limited, you can compare the effects of market volatilities on MELIA HOTELS and China Mobile 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 China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and China Mobile.
Diversification Opportunities for MELIA HOTELS and China Mobile
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MELIA and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited 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 China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and China Mobile go up and down completely randomly.
Pair Corralation between MELIA HOTELS and China Mobile
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.0 times more return on investment than China Mobile. However, MELIA HOTELS is 1.0 times more volatile than China Mobile Limited. It trades about 0.14 of its potential returns per unit of risk. China Mobile Limited is currently generating about -0.02 per unit of risk. If you would invest 632.00 in MELIA HOTELS on September 3, 2024 and sell it today you would earn a total of 54.00 from holding MELIA HOTELS or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
MELIA HOTELS vs. China Mobile Limited
Performance |
| Timeline |
| MELIA HOTELS |
| China Mobile Limited |
MELIA HOTELS and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and China Mobile
The main advantage of trading using opposite MELIA HOTELS and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
| China Mobile vs. NISSAN CHEMICAL IND | China Mobile vs. Hyatt Hotels | China Mobile vs. Westlake Chemical | China Mobile 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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