Correlation Between MELIA HOTELS and GOLDEN CROSS

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

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

Diversification Opportunities for MELIA HOTELS and GOLDEN CROSS

0.0

Correlation Coefficient

MELIA HOTELS  GOLDEN CROSS

Pay attention - limited upside

The 3 months correlation between MELIA and GOLDEN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and GOLDEN CROSS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDEN CROSS RES and MELIA 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 MELIA HOTELS are associated (or correlated) with GOLDEN CROSS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDEN CROSS RES has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and GOLDEN CROSS go up and down completely randomly.

Pair Corralation between MELIA HOTELS and GOLDEN CROSS

If you would invest  705.00  in MELIA HOTELS on September 19, 2024 and sell it today you would earn a total of  36.00  from holding MELIA HOTELS or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MELIA HOTELS  vs.  GOLDEN CROSS RES

MELIA HOTELS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MELIA HOTELS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MELIA HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

GOLDEN CROSS RES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOLDEN CROSS RES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, GOLDEN CROSS is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MELIA HOTELS and GOLDEN CROSS

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

The idea behind MELIA HOTELS and GOLDEN CROSS RES 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.