Correlation Between Melco Resorts and Computershare

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

By analyzing existing cross correlation between Melco Resorts Entertainment and Computershare Limited, you can compare the effects of market volatilities on Melco Resorts and Computershare 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 Melco Resorts with a short position of Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Computershare.

Diversification Opportunities for Melco Resorts and Computershare

0.01

Correlation Coefficient

Melco Resorts  Computershare

Significant diversification

The 3 months correlation between Melco and Computershare is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited and Melco Resorts 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 Melco Resorts Entertainment are associated (or correlated) with Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of Melco Resorts i.e., Melco Resorts and Computershare go up and down completely randomly.

Pair Corralation between Melco Resorts and Computershare

Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to generate 1.75 times more return on investment than Computershare. However, Melco Resorts is 1.75 times more volatile than Computershare Limited. It trades about 0.36 of its potential returns per unit of risk. Computershare Limited is currently generating about 0.04 per unit of risk. If you would invest  426.00  in Melco Resorts Entertainment on April 24, 2025 and sell it today you would earn a total of  344.00  from holding Melco Resorts Entertainment or generate 80.75% return on investment over 90 days.

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

Melco Resorts Entertainment  vs.  Computershare Limited

Melco Resorts Entert

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Melco Resorts Entertainment are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Melco Resorts unveiled solid returns over the last few months and may actually be approaching a breakup point.

Computershare Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Computershare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Melco Resorts and Computershare

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

The idea behind Melco Resorts Entertainment and Computershare Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.