Correlation Between Sekisui Chemical and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical 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 Sekisui Chemical and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and MELIA HOTELS, you can compare the effects of market volatilities on Sekisui Chemical 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 Sekisui Chemical with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and MELIA HOTELS.
Diversification Opportunities for Sekisui Chemical and MELIA HOTELS
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sekisui and MELIA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Sekisui 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 Sekisui Chemical Co 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 Sekisui Chemical i.e., Sekisui Chemical and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Sekisui Chemical and MELIA HOTELS
Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 2.08 times more return on investment than MELIA HOTELS. However, Sekisui Chemical is 2.08 times more volatile than MELIA HOTELS. It trades about 0.23 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.02 per unit of risk. If you would invest 1,490 in Sekisui Chemical Co on October 10, 2024 and sell it today you would earn a total of 180.00 from holding Sekisui Chemical Co or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Sekisui Chemical Co vs. MELIA HOTELS
Performance |
| Timeline |
| Sekisui Chemical |
| MELIA HOTELS |
Sekisui Chemical and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and MELIA HOTELS
The main advantage of trading using opposite Sekisui Chemical and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical 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.| Sekisui Chemical vs. H2O Retailing | Sekisui Chemical vs. Chesapeake Utilities | Sekisui Chemical vs. TAL Education Group | Sekisui Chemical vs. Grand Canyon Education |
| MELIA HOTELS vs. Air Transport Services | MELIA HOTELS vs. Sunstone Hotel Investors | MELIA HOTELS vs. Choice Hotels International | MELIA HOTELS vs. JD SPORTS FASH |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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