Correlation Between MFE Mediaforeurope and Millenium Hotels

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

By analyzing existing cross correlation between MFE Mediaforeurope NV and Millenium Hotels Real, you can compare the effects of market volatilities on MFE Mediaforeurope and Millenium 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 MFE Mediaforeurope with a short position of Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFE Mediaforeurope and Millenium Hotels.

Diversification Opportunities for MFE Mediaforeurope and Millenium Hotels

-0.63

Correlation Coefficient

MFE Mediaforeurope  Millenium Hotels

Excellent diversification

The 3 months correlation between MFE and Millenium is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MFE Mediaforeurope NV and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and MFE Mediaforeurope 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 MFE Mediaforeurope NV are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of MFE Mediaforeurope i.e., MFE Mediaforeurope and Millenium Hotels go up and down completely randomly.

Pair Corralation between MFE Mediaforeurope and Millenium Hotels

Assuming the 90 days trading horizon MFE Mediaforeurope is expected to generate 12.89 times less return on investment than Millenium Hotels. But when comparing it to its historical volatility, MFE Mediaforeurope NV is 1.7 times less risky than Millenium Hotels. It trades about 0.03 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Millenium Hotels Real on April 21, 2025 and sell it today you would earn a total of  120.00  from holding Millenium Hotels Real or generate 52.63% return on investment over 90 days.

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

MFE Mediaforeurope NV  vs.  Millenium Hotels Real

MFE Mediaforeurope

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFE Mediaforeurope NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, MFE Mediaforeurope is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Millenium Hotels Real

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Millenium Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFE Mediaforeurope and Millenium Hotels

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

The idea behind MFE Mediaforeurope NV and Millenium Hotels Real 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..