Correlation Between Melia Hotels and Segro Plc

Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Segro Plc 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 Melia Hotels and Segro Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Melia Hotels and Segro Plc, you can compare the effects of market volatilities on Melia Hotels and Segro Plc 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 Melia Hotels with a short position of Segro Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Segro Plc.

Diversification Opportunities for Melia Hotels and Segro Plc

0.0

Correlation Coefficient

Melia Hotels  Segro Plc

Pay attention - limited upside

The 3 months correlation between Melia and Segro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Segro Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Segro Plc and Melia Hotels 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 Melia Hotels are associated (or correlated) with Segro Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Segro Plc has no effect on the direction of Melia Hotels i.e., Melia Hotels and Segro Plc go up and down completely randomly.

Pair Corralation between Melia Hotels and Segro Plc

Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Segro Plc. In addition to that, Melia Hotels is 1.27 times more volatile than Segro Plc. It trades about -0.1 of its total potential returns per unit of risk. Segro Plc is currently generating about 0.0 per unit of volatility. If you would invest  69,520  in Segro Plc on December 22, 2024 and sell it today you would lose (400.00) from holding Segro Plc or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Melia Hotels  vs.  Segro Plc

Melia Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Melia Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Segro Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Segro Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Segro Plc is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Melia Hotels and Segro Plc

The main advantage of trading using opposite Melia Hotels and Segro Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Segro Plc 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 Segro Plc will offset losses from the drop in Segro Plc's long position.

The idea behind Melia Hotels and Segro Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.