Correlation Between MELIA HOTELS and Intel

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

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

Diversification Opportunities for MELIA HOTELS and Intel

0.32

Correlation Coefficient

MELIA HOTELS  Intel

Weak diversification

The 3 months correlation between MELIA and Intel is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Intel go up and down completely randomly.

Pair Corralation between MELIA HOTELS and Intel

Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.64 times more return on investment than Intel. However, MELIA HOTELS is 1.56 times less risky than Intel. It trades about 0.15 of its potential returns per unit of risk. Intel is currently generating about -0.26 per unit of risk. If you would invest  705.00  in MELIA HOTELS on September 18, 2024 and sell it today you would earn a total of  46.00  from holding MELIA HOTELS or generate 6.52% return on investment over 90 days.

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

MELIA HOTELS  vs.  Intel

MELIA HOTELS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MELIA HOTELS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MELIA HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MELIA HOTELS and Intel

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

The idea behind MELIA HOTELS and Intel 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.