Correlation Between Parlem Telecom and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Parlem Telecom and Melia 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 Parlem Telecom and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parlem Telecom Companyia and Melia Hotels, you can compare the effects of market volatilities on Parlem Telecom and Melia 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 Parlem Telecom with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parlem Telecom and Melia Hotels.
Diversification Opportunities for Parlem Telecom and Melia Hotels
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Parlem and Melia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Parlem Telecom Companyia and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Parlem Telecom 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 Parlem Telecom Companyia are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Parlem Telecom i.e., Parlem Telecom and Melia Hotels go up and down completely randomly.
Pair Corralation between Parlem Telecom and Melia Hotels
Assuming the 90 days trading horizon Parlem Telecom Companyia is expected to generate 1.34 times more return on investment than Melia Hotels. However, Parlem Telecom is 1.34 times more volatile than Melia Hotels. It trades about 0.0 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.05 per unit of risk. If you would invest 350.00 in Parlem Telecom Companyia on August 25, 2024 and sell it today you would lose (12.00) from holding Parlem Telecom Companyia or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parlem Telecom Companyia vs. Melia Hotels
Performance |
| Timeline |
| Parlem Telecom ia |
| Melia Hotels |
Parlem Telecom and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parlem Telecom and Melia Hotels
The main advantage of trading using opposite Parlem Telecom and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parlem Telecom position performs unexpectedly, Melia 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Parlem Telecom vs. Cellnex Telecom SA | Parlem Telecom vs. Telefonica | Parlem Telecom vs. Lleidanetworks Serveis Telematics |
| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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