Correlation Between Merida Industry and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Ambassador Hotel 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 Merida Industry and Ambassador Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Ambassador Hotel, you can compare the effects of market volatilities on Merida Industry and Ambassador Hotel 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 Merida Industry with a short position of Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Ambassador Hotel.
Diversification Opportunities for Merida Industry and Ambassador Hotel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merida and Ambassador is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel and Merida Industry 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 Merida Industry Co are associated (or correlated) with Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Merida Industry i.e., Merida Industry and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Merida Industry and Ambassador Hotel
Assuming the 90 days trading horizon Merida Industry is expected to generate 9.98 times less return on investment than Ambassador Hotel. In addition to that, Merida Industry is 1.07 times more volatile than Ambassador Hotel. It trades about 0.01 of its total potential returns per unit of risk. Ambassador Hotel is currently generating about 0.06 per unit of volatility. If you would invest 3,290 in Ambassador Hotel on September 25, 2024 and sell it today you would earn a total of 2,260 from holding Ambassador Hotel or generate 68.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.79% |
Values | Daily Returns |
Merida Industry Co vs. Ambassador Hotel
Performance |
Timeline |
Merida Industry |
Ambassador Hotel |
Merida Industry and Ambassador Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merida Industry and Ambassador Hotel
The main advantage of trading using opposite Merida Industry and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Ambassador Hotel 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Uni President Enterprises Corp | Merida Industry vs. Pou Chen Corp |
Ambassador Hotel vs. Merida Industry Co | Ambassador Hotel vs. Cheng Shin Rubber | Ambassador Hotel vs. Uni President Enterprises Corp | Ambassador Hotel vs. Pou Chen Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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