Correlation Between Meli Hotels and BranchOut Food

Can any of the company-specific risk be diversified away by investing in both Meli Hotels and BranchOut Food 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 BranchOut Food 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 BranchOut Food Common, you can compare the effects of market volatilities on Meli Hotels and BranchOut Food 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 BranchOut Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and BranchOut Food.

Diversification Opportunities for Meli Hotels and BranchOut Food

-0.07

Correlation Coefficient

Meli Hotels  BranchOut Food

Good diversification

The 3 months correlation between Meli and BranchOut is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and BranchOut Food Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BranchOut Food Common 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 BranchOut Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BranchOut Food Common has no effect on the direction of Meli Hotels i.e., Meli Hotels and BranchOut Food go up and down completely randomly.

Pair Corralation between Meli Hotels and BranchOut Food

If you would invest  173.00  in BranchOut Food Common on October 15, 2024 and sell it today you would earn a total of  1.00  from holding BranchOut Food Common or generate 0.58% return on investment over 90 days.

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

Meli Hotels International  vs.  BranchOut Food Common

Meli Hotels International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meli Hotels International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Meli Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BranchOut Food Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BranchOut Food Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BranchOut Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Meli Hotels and BranchOut Food

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

The idea behind Meli Hotels International and BranchOut Food Common 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.