Correlation Between MELIA HOTELS and PC Connection
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and PC Connection 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 PC Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and PC Connection, you can compare the effects of market volatilities on MELIA HOTELS and PC Connection 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 PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and PC Connection.
Diversification Opportunities for MELIA HOTELS and PC Connection
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between MELIA and PCC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and PC Connection go up and down completely randomly.
Pair Corralation between MELIA HOTELS and PC Connection
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.79 times less return on investment than PC Connection. In addition to that, MELIA HOTELS is 1.11 times more volatile than PC Connection. It trades about 0.03 of its total potential returns per unit of risk. PC Connection is currently generating about 0.06 per unit of volatility. If you would invest 3,927 in PC Connection on December 4, 2024 and sell it today you would earn a total of 2,073 from holding PC Connection or generate 52.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MELIA HOTELS vs. PC Connection
Performance |
| Timeline |
| MELIA HOTELS |
| PC Connection |
MELIA HOTELS and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and PC Connection
The main advantage of trading using opposite MELIA HOTELS and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection's long position.| MELIA HOTELS vs. PARKEN SPORT ENT | MELIA HOTELS vs. VELA TECHNOLPLC LS 0001 | MELIA HOTELS vs. Columbia Sportswear | MELIA HOTELS vs. DICKS Sporting Goods |
| PC Connection vs. Telecom Argentina SA | PC Connection vs. The Hanover Insurance | PC Connection vs. COMBA TELECOM SYST | PC Connection vs. Entravision Communications |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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