Correlation Between Mindflair Plc and Melia Hotels

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

By analyzing existing cross correlation between Mindflair Plc and Melia Hotels, you can compare the effects of market volatilities on Mindflair Plc and Melia Hotels 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 Mindflair Plc with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mindflair Plc and Melia Hotels.

Diversification Opportunities for Mindflair Plc and Melia Hotels

-0.26

Correlation Coefficient

Mindflair Plc  Melia Hotels

Very good diversification

The 3 months correlation between Mindflair and Melia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mindflair Plc and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Mindflair Plc 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 Mindflair Plc are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Mindflair Plc i.e., Mindflair Plc and Melia Hotels go up and down completely randomly.

Pair Corralation between Mindflair Plc and Melia Hotels

Assuming the 90 days trading horizon Mindflair Plc is expected to under-perform the Melia Hotels. In addition to that, Mindflair Plc is 3.56 times more volatile than Melia Hotels. It trades about -0.23 of its total potential returns per unit of risk. Melia Hotels is currently generating about 0.28 per unit of volatility. If you would invest  678.00  in Melia Hotels on September 29, 2024 and sell it today you would earn a total of  56.00  from holding Melia Hotels or generate 8.26% return on investment over 90 days.

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

Mindflair Plc  vs.  Melia Hotels

Mindflair Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindflair Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mindflair Plc and Melia Hotels

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

The idea behind Mindflair Plc and Melia Hotels 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.