Correlation Between MELIA HOTELS and Dalata Hotel
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Dalata Hotel 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 Dalata Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Dalata Hotel Group, you can compare the effects of market volatilities on MELIA HOTELS and Dalata Hotel 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 Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Dalata Hotel.
Diversification Opportunities for MELIA HOTELS and Dalata Hotel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MELIA and Dalata is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Dalata Hotel go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Dalata Hotel
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.92 times more return on investment than Dalata Hotel. However, MELIA HOTELS is 1.09 times less risky than Dalata Hotel. It trades about 0.14 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.09 per unit of risk. If you would invest 660.00 in MELIA HOTELS on August 30, 2024 and sell it today you would earn a total of 27.00 from holding MELIA HOTELS or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Dalata Hotel Group
Performance |
| Timeline |
| MELIA HOTELS |
| Dalata Hotel Group |
MELIA HOTELS and Dalata Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Dalata Hotel
The main advantage of trading using opposite MELIA HOTELS and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Superior Plus Corp | MELIA HOTELS vs. SIVERS SEMICONDUCTORS AB |
| Dalata Hotel vs. Jacquet Metal Service | Dalata Hotel vs. GREENX METALS LTD | Dalata Hotel vs. Internet Thailand PCL | Dalata Hotel vs. GALENA MINING LTD |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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