Correlation Between Playtech Plc and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and MELIA HOTELS, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and MELIA HOTELS.
Diversification Opportunities for Playtech Plc and MELIA HOTELS
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playtech and MELIA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Playtech Plc and MELIA HOTELS
Assuming the 90 days trading horizon Playtech plc is expected to under-perform the MELIA HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Playtech plc is 1.64 times less risky than MELIA HOTELS. The stock trades about -0.66 of its potential returns per unit of risk. The MELIA HOTELS is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 733.00 in MELIA HOTELS on October 13, 2024 and sell it today you would lose (19.00) from holding MELIA HOTELS or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Playtech plc vs. MELIA HOTELS
Performance |
| Timeline |
| Playtech plc |
| MELIA HOTELS |
Playtech Plc and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and MELIA HOTELS
The main advantage of trading using opposite Playtech Plc and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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's long position.| Playtech Plc vs. COMBA TELECOM SYST | Playtech Plc vs. Telecom Argentina SA | Playtech Plc vs. AM EAGLE OUTFITTERS | Playtech Plc vs. United Utilities Group |
| MELIA HOTELS vs. Yanzhou Coal Mining | MELIA HOTELS vs. USWE SPORTS AB | MELIA HOTELS vs. Playtech plc | MELIA HOTELS vs. Endeavour Mining PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |