Correlation Between FLOW TRADERS and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Meli Hotels International, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Meli Hotels.
Diversification Opportunities for FLOW TRADERS and Meli Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and Meli is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Meli Hotels go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Meli Hotels
Assuming the 90 days horizon FLOW TRADERS is expected to generate 1.35 times less return on investment than Meli Hotels. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.25 times less risky than Meli Hotels. It trades about 0.1 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 669.00 in Meli Hotels International on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Meli Hotels International or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Meli Hotels International
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Meli Hotels International |
FLOW TRADERS and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Meli Hotels
The main advantage of trading using opposite FLOW TRADERS and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Macquarie Group Limited | FLOW TRADERS vs. MSCI Inc | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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