Correlation Between Melexis NV and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Melexis NV and Meli Hotels 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 Melexis NV and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Meli Hotels International, you can compare the effects of market volatilities on Melexis NV and Meli Hotels 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 Melexis NV with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Meli Hotels.
Diversification Opportunities for Melexis NV and Meli Hotels
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melexis and Meli is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and Melexis NV 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 Melexis NV are associated (or correlated) with Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Melexis NV i.e., Melexis NV and Meli Hotels go up and down completely randomly.
Pair Corralation between Melexis NV and Meli Hotels
Assuming the 90 days horizon Melexis NV is expected to generate 1.02 times less return on investment than Meli Hotels. In addition to that, Melexis NV is 1.65 times more volatile than Meli Hotels International. It trades about 0.02 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.04 per unit of volatility. If you would invest 595.00 in Meli Hotels International on September 12, 2024 and sell it today you would earn a total of 116.00 from holding Meli Hotels International or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.16% |
| Values | Daily Returns |
Melexis NV vs. Meli Hotels International
Performance |
| Timeline |
| Melexis NV |
| Meli Hotels International |
Melexis NV and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and Meli Hotels
The main advantage of trading using opposite Melexis NV and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, Meli Hotels 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| Melexis NV vs. Meli Hotels International | Melexis NV vs. Boyd Gaming | Melexis NV vs. Playtech plc | Melexis NV vs. Sonos Inc |
| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. Accor SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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