Correlation Between MELIA HOTELS and Hitachi
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Hitachi 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 Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Hitachi, you can compare the effects of market volatilities on MELIA HOTELS and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Hitachi.
Diversification Opportunities for MELIA HOTELS and Hitachi
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MELIA and Hitachi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Hitachi go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Hitachi
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.48 times more return on investment than Hitachi. However, MELIA HOTELS is 2.09 times less risky than Hitachi. It trades about 0.1 of its potential returns per unit of risk. Hitachi is currently generating about -0.02 per unit of risk. If you would invest 674.00 in MELIA HOTELS on August 25, 2024 and sell it today you would earn a total of 17.00 from holding MELIA HOTELS or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MELIA HOTELS vs. Hitachi
Performance |
| Timeline |
| MELIA HOTELS |
| Hitachi |
MELIA HOTELS and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Hitachi
The main advantage of trading using opposite MELIA HOTELS and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
| Hitachi vs. MELIA HOTELS | Hitachi vs. Magnachip Semiconductor | Hitachi vs. TOREX SEMICONDUCTOR LTD | Hitachi vs. Playa Hotels Resorts |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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