Correlation Between Merlin Properties and Atom Hoteles

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

By analyzing existing cross correlation between Merlin Properties SOCIMI and Atom Hoteles Socimi, you can compare the effects of market volatilities on Merlin Properties and Atom Hoteles 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 Merlin Properties with a short position of Atom Hoteles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Atom Hoteles.

Diversification Opportunities for Merlin Properties and Atom Hoteles

-0.79

Correlation Coefficient

Merlin Properties  Atom Hoteles

Pay attention - limited upside

The 3 months correlation between Merlin and Atom is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Atom Hoteles Socimi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atom Hoteles Socimi and Merlin Properties 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 Merlin Properties SOCIMI are associated (or correlated) with Atom Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atom Hoteles Socimi has no effect on the direction of Merlin Properties i.e., Merlin Properties and Atom Hoteles go up and down completely randomly.

Pair Corralation between Merlin Properties and Atom Hoteles

Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to under-perform the Atom Hoteles. But the stock apears to be less risky and, when comparing its historical volatility, Merlin Properties SOCIMI is 3.25 times less risky than Atom Hoteles. The stock trades about -0.04 of its potential returns per unit of risk. The Atom Hoteles Socimi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Atom Hoteles Socimi on August 30, 2024 and sell it today you would earn a total of  425.00  from holding Atom Hoteles Socimi or generate 43.59% return on investment over 90 days.

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

Merlin Properties SOCIMI  vs.  Atom Hoteles Socimi

Merlin Properties SOCIMI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merlin Properties SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Merlin Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Atom Hoteles Socimi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atom Hoteles Socimi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atom Hoteles exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merlin Properties and Atom Hoteles

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

The idea behind Merlin Properties SOCIMI and Atom Hoteles Socimi 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.