Correlation Between Sqs Software and MELIA HOTELS

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

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

Diversification Opportunities for Sqs Software and MELIA HOTELS

-0.51

Correlation Coefficient

Sqs Software  MELIA HOTELS

Excellent diversification

The 3 months correlation between Sqs and MELIA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sqs Software Quality and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Sqs Software 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 Sqs Software Quality 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 Sqs Software i.e., Sqs Software and MELIA HOTELS go up and down completely randomly.

Pair Corralation between Sqs Software and MELIA HOTELS

Assuming the 90 days trading horizon Sqs Software Quality is expected to generate 1.99 times more return on investment than MELIA HOTELS. However, Sqs Software is 1.99 times more volatile than MELIA HOTELS. It trades about 0.17 of its potential returns per unit of risk. MELIA HOTELS is currently generating about -0.06 per unit of risk. If you would invest  329.00  in Sqs Software Quality on December 29, 2024 and sell it today you would earn a total of  139.00  from holding Sqs Software Quality or generate 42.25% return on investment over 90 days.

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

Sqs Software Quality  vs.  MELIA HOTELS

Sqs Software Quality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sqs Software Quality are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sqs Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

MELIA HOTELS

Risk-Adjusted Performance

Very Weak

Over the last 90 days MELIA HOTELS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sqs Software and MELIA HOTELS

The main advantage of trading using opposite Sqs Software and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sqs Software 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's long position.

The idea behind Sqs Software Quality 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.

Check out your portfolio center.

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.