Correlation Between Meli Hotels and HELIOS TECHS

Can any of the company-specific risk be diversified away by investing in both Meli Hotels and HELIOS TECHS 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 Meli Hotels and HELIOS TECHS 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 HELIOS TECHS INC, you can compare the effects of market volatilities on Meli Hotels and HELIOS TECHS 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 Meli Hotels with a short position of HELIOS TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and HELIOS TECHS.

Diversification Opportunities for Meli Hotels and HELIOS TECHS

0.12

Correlation Coefficient

Meli Hotels  HELIOS TECHS

Average diversification

The 3 months correlation between Meli and HELIOS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and HELIOS TECHS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HELIOS TECHS INC and Meli 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 HELIOS TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HELIOS TECHS INC has no effect on the direction of Meli Hotels i.e., Meli Hotels and HELIOS TECHS go up and down completely randomly.

Pair Corralation between Meli Hotels and HELIOS TECHS

Assuming the 90 days horizon Meli Hotels International is expected to under-perform the HELIOS TECHS. But the stock apears to be less risky and, when comparing its historical volatility, Meli Hotels International is 1.52 times less risky than HELIOS TECHS. The stock trades about -0.25 of its potential returns per unit of risk. The HELIOS TECHS INC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,271  in HELIOS TECHS INC on October 25, 2024 and sell it today you would earn a total of  89.00  from holding HELIOS TECHS INC or generate 2.08% return on investment over 90 days.

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

Meli Hotels International  vs.  HELIOS TECHS INC

Meli Hotels International

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meli Hotels International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Meli Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HELIOS TECHS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HELIOS TECHS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HELIOS TECHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Meli Hotels and HELIOS TECHS

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

The idea behind Meli Hotels International and HELIOS TECHS INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.