Correlation Between IKEJA HOTELS and MEYER PLC

Can any of the company-specific risk be diversified away by investing in both IKEJA HOTELS and MEYER 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 IKEJA HOTELS and MEYER PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for IKEJA HOTELS and MEYER PLC

0.13

Correlation Coefficient

IKEJA HOTELS  MEYER PLC

Average diversification

The 3 months correlation between IKEJA and MEYER is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding IKEJA HOTELS PLC and MEYER PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEYER PLC and IKEJA 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 IKEJA HOTELS PLC are associated (or correlated) with MEYER PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEYER PLC has no effect on the direction of IKEJA HOTELS i.e., IKEJA HOTELS and MEYER PLC go up and down completely randomly.

Pair Corralation between IKEJA HOTELS and MEYER PLC

Assuming the 90 days trading horizon IKEJA HOTELS is expected to generate 26.62 times less return on investment than MEYER PLC. In addition to that, IKEJA HOTELS is 4.43 times more volatile than MEYER PLC. It trades about 0.0 of its total potential returns per unit of risk. MEYER PLC is currently generating about 0.13 per unit of volatility. If you would invest  843.00  in MEYER PLC on December 28, 2024 and sell it today you would earn a total of  82.00  from holding MEYER PLC or generate 9.73% return on investment over 90 days.

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

IKEJA HOTELS PLC  vs.  MEYER PLC

IKEJA HOTELS PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days IKEJA HOTELS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IKEJA HOTELS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

MEYER PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEYER PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, MEYER PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IKEJA HOTELS and MEYER PLC

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

The idea behind IKEJA HOTELS PLC and MEYER 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.