Correlation Between Bet At and Melia Hotels

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Can any of the company-specific risk be diversified away by investing in both Bet At 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 Bet At and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between bet at home AG and Melia Hotels, you can compare the effects of market volatilities on Bet At 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 Bet At with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bet At and Melia Hotels.

Diversification Opportunities for Bet At and Melia Hotels

BetMeliaDiversified AwayBetMeliaDiversified Away100%
-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bet and Melia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding bet at home AG and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Bet At 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 bet at home AG 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 Bet At i.e., Bet At and Melia Hotels go up and down completely randomly.

Pair Corralation between Bet At and Melia Hotels

Assuming the 90 days trading horizon Bet At is expected to generate 17.19 times less return on investment than Melia Hotels. In addition to that, Bet At is 1.32 times more volatile than Melia Hotels. It trades about 0.01 of its total potential returns per unit of risk. Melia Hotels is currently generating about 0.2 per unit of volatility. If you would invest  707.00  in Melia Hotels on September 20, 2024 and sell it today you would earn a total of  45.00  from holding Melia Hotels or generate 6.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

bet at home AG  vs.  Melia Hotels

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-10010
JavaScript chart by amCharts 3.21.150RIP 0MKO
       Timeline  
bet at home 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days bet at home AG 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.52.62.72.82.933.13.23.3
Melia Hotels 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Melia Hotels are ranked lower than 13 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec6.46.66.877.27.47.67.8

Bet At and Melia Hotels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.35-3.26-2.17-1.070.00.91.822.733.65 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.150RIP 0MKO
       Returns  

Pair Trading with Bet At and Melia Hotels

The main advantage of trading using opposite Bet At and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bet At 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 bet at home AG 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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