Correlation Between Dalata Hotel and Meli Hotels

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

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

Diversification Opportunities for Dalata Hotel and Meli Hotels

0.0

Correlation Coefficient

Dalata Hotel  Meli Hotels

Pay attention - limited upside

The 3 months correlation between Dalata and Meli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group 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 Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and Meli Hotels go up and down completely randomly.

Pair Corralation between Dalata Hotel and Meli Hotels

Assuming the 90 days horizon Dalata Hotel Group is expected to under-perform the Meli Hotels. But the otc stock apears to be less risky and, when comparing its historical volatility, Dalata Hotel Group is 7.14 times less risky than Meli Hotels. The otc stock trades about -0.03 of its potential returns per unit of risk. The Meli Hotels International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Meli Hotels International on October 14, 2024 and sell it today you would earn a total of  179.00  from holding Meli Hotels International or generate 29.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.97%
Values	Daily Returns

Dalata Hotel Group  vs.  Meli Hotels International

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Meli Hotels International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meli Hotels International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Meli Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dalata Hotel and Meli Hotels

The main advantage of trading using opposite Dalata Hotel and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.