Correlation Between MELIA HOTELS and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Deutsche Telekom 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 Deutsche Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Deutsche Telekom AG, you can compare the effects of market volatilities on MELIA HOTELS and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Deutsche Telekom.
Diversification Opportunities for MELIA HOTELS and Deutsche Telekom
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MELIA and Deutsche is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Deutsche Telekom go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Deutsche Telekom
Assuming the 90 days trading horizon MELIA HOTELS is expected to under-perform the Deutsche Telekom. In addition to that, MELIA HOTELS is 1.19 times more volatile than Deutsche Telekom AG. It trades about -0.35 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about -0.14 per unit of volatility. If you would invest 3,000 in Deutsche Telekom AG on October 17, 2024 and sell it today you would lose (100.00) from holding Deutsche Telekom AG or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
MELIA HOTELS vs. Deutsche Telekom AG
Performance |
| Timeline |
| MELIA HOTELS |
| Deutsche Telekom |
MELIA HOTELS and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Deutsche Telekom
The main advantage of trading using opposite MELIA HOTELS and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| MELIA HOTELS vs. Richardson Electronics | MELIA HOTELS vs. STORE ELECTRONIC | MELIA HOTELS vs. Renesas Electronics | MELIA HOTELS vs. WillScot Mobile Mini |
| Deutsche Telekom vs. MELIA HOTELS | Deutsche Telekom vs. InterContinental Hotels Group | Deutsche Telekom vs. Monster Beverage Corp | Deutsche Telekom vs. INTERCONT 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |