Correlation Between Sumitomo Chemical and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Meliá 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 Sumitomo Chemical and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and Meli Hotels International, you can compare the effects of market volatilities on Sumitomo Chemical and Meliá 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 Sumitomo Chemical with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Meliá Hotels.
Diversification Opportunities for Sumitomo Chemical and Meliá Hotels
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Meliá is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical 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 Sumitomo Chemical 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 Sumitomo Chemical are associated (or correlated) with Meliá 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 Sumitomo Chemical i.e., Sumitomo Chemical and Meliá Hotels go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Meliá Hotels
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the Meliá Hotels. In addition to that, Sumitomo Chemical is 1.37 times more volatile than Meli Hotels International. It trades about -0.16 of its total potential returns per unit of risk. Meli Hotels International is currently generating about -0.02 per unit of volatility. If you would invest 651.00 in Meli Hotels International on January 12, 2025 and sell it today you would lose (18.00) from holding Meli Hotels International or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. Meli Hotels International
Performance |
| Timeline |
| Sumitomo Chemical |
| Meli Hotels International |
Sumitomo Chemical and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Meliá Hotels
The main advantage of trading using opposite Sumitomo Chemical and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Sumitomo Chemical vs. MHP Hotel AG | Sumitomo Chemical vs. MIRAMAR HOTEL INV | Sumitomo Chemical vs. Magnachip Semiconductor | Sumitomo Chemical vs. Taiwan Semiconductor Manufacturing |
| Meliá Hotels vs. THRACE PLASTICS | Meliá Hotels vs. Compagnie Plastic Omnium | Meliá Hotels vs. Cars Inc | Meliá Hotels vs. COMMERCIAL VEHICLE |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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