Correlation Between Melco Resorts and Unifique Telecomunicaes

Can any of the company-specific risk be diversified away by investing in both Melco Resorts and Unifique Telecomunicaes 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 Melco Resorts and Unifique Telecomunicaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Melco Resorts Entertainment and Unifique Telecomunicaes SA, you can compare the effects of market volatilities on Melco Resorts and Unifique Telecomunicaes 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 Melco Resorts with a short position of Unifique Telecomunicaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Unifique Telecomunicaes.

Diversification Opportunities for Melco Resorts and Unifique Telecomunicaes

0.02

Correlation Coefficient

Melco Resorts  Unifique Telecomunicaes

Significant diversification

The 3 months correlation between Melco and Unifique is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Unifique Telecomunicaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifique Telecomunicaes and Melco Resorts 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 Melco Resorts Entertainment are associated (or correlated) with Unifique Telecomunicaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifique Telecomunicaes has no effect on the direction of Melco Resorts i.e., Melco Resorts and Unifique Telecomunicaes go up and down completely randomly.

Pair Corralation between Melco Resorts and Unifique Telecomunicaes

Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Unifique Telecomunicaes. In addition to that, Melco Resorts is 1.46 times more volatile than Unifique Telecomunicaes SA. It trades about -0.03 of its total potential returns per unit of risk. Unifique Telecomunicaes SA is currently generating about 0.01 per unit of volatility. If you would invest  350.00  in Unifique Telecomunicaes SA on October 10, 2024 and sell it today you would lose (12.00) from holding Unifique Telecomunicaes SA or give up 3.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

Melco Resorts Entertainment  vs.  Unifique Telecomunicaes SA

Melco Resorts Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Melco Resorts Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifique Telecomunicaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Pair Trading with Melco Resorts and Unifique Telecomunicaes

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

The idea behind Melco Resorts Entertainment and Unifique Telecomunicaes SA 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.