Correlation Between Meliá Hotels and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Charoen Pokphand 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 Meliá Hotels and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and Charoen Pokphand Foods, you can compare the effects of market volatilities on Meliá Hotels and Charoen Pokphand 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 Meliá Hotels with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Charoen Pokphand.
Diversification Opportunities for Meliá Hotels and Charoen Pokphand
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meliá and Charoen is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and Meliá 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 Meli Hotels International are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Foods has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Meliá Hotels and Charoen Pokphand
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.57 times more return on investment than Charoen Pokphand. However, Meli Hotels International is 1.77 times less risky than Charoen Pokphand. It trades about 0.02 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.04 per unit of risk. If you would invest 669.00 in Meli Hotels International on October 22, 2024 and sell it today you would earn a total of 10.00 from holding Meli Hotels International or generate 1.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Meli Hotels International vs. Charoen Pokphand Foods
Performance |
Timeline |
Meli Hotels International |
Charoen Pokphand Foods |
Meliá Hotels and Charoen Pokphand Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meliá Hotels and Charoen Pokphand
The main advantage of trading using opposite Meliá Hotels and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Charoen Pokphand 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 Charoen Pokphand will offset losses from the drop in Charoen Pokphand's long position.Meliá Hotels vs. De Grey Mining | Meliá Hotels vs. Tianjin Capital Environmental | Meliá Hotels vs. NEW MILLENNIUM IRON | Meliá Hotels vs. GREENX METALS LTD |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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