Correlation Between CHINA STATE and Meli Hotels

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

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

Diversification Opportunities for CHINA STATE and Meli Hotels

0.0

Correlation Coefficient

CHINA STATE  Meli Hotels

Pay attention - limited upside

The 3 months correlation between CHINA and Meli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU 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 CHINA STATE 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 CHINA STATE STRU are associated (or correlated) with Meli 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 CHINA STATE i.e., CHINA STATE and Meli Hotels go up and down completely randomly.

Pair Corralation between CHINA STATE and Meli Hotels

If you would invest  135.00  in CHINA STATE STRU on December 21, 2024 and sell it today you would earn a total of  0.00  from holding CHINA STATE STRU or generate 0.0% return on investment over 90 days.

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

CHINA STATE STRU  vs.  Meli Hotels International

CHINA STATE STRU

Risk-Adjusted Performance

Very Weak

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

Meli Hotels International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meli Hotels International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHINA STATE and Meli Hotels

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

The idea behind CHINA STATE STRU and Meli Hotels International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.