Correlation Between Crombie Real and Meli Hotels

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

Diversification Opportunities for Crombie Real and Meli Hotels

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Crombie and Meli is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and Crombie Real 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 Crombie Real Estate are associated (or correlated) with Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Crombie Real i.e., Crombie Real and Meli Hotels go up and down completely randomly.

Pair Corralation between Crombie Real and Meli Hotels

Assuming the 90 days horizon Crombie Real Estate is expected to under-perform the Meli Hotels. But the pink sheet apears to be less risky and, when comparing its historical volatility, Crombie Real Estate is 2.06 times less risky than Meli Hotels. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Meli Hotels International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Meli Hotels International on February 26, 2024 and sell it today you would earn a total of  124.00  from holding Meli Hotels International or generate 16.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Crombie Real Estate  vs.  Meli Hotels International

 Performance 
       Timeline  
Crombie Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Meli Hotels International 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
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 weak basic indicators, Meli Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Crombie Real and Meli Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Crombie Real and Meli Hotels

The main advantage of trading using opposite Crombie Real and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crombie Real position performs unexpectedly, Meli 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.
The idea behind Crombie Real Estate and Meli Hotels International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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