Correlation Between Rainbow Childrens and Juniper Hotels

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

By analyzing existing cross correlation between Rainbow Childrens Medicare and Juniper Hotels, you can compare the effects of market volatilities on Rainbow Childrens and Juniper 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 Rainbow Childrens with a short position of Juniper Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainbow Childrens and Juniper Hotels.

Diversification Opportunities for Rainbow Childrens and Juniper Hotels

-0.85

Correlation Coefficient

Rainbow Childrens  Juniper Hotels

Pay attention - limited upside

The 3 months correlation between Rainbow and Juniper is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Childrens Medicare and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Rainbow Childrens 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 Rainbow Childrens Medicare are associated (or correlated) with Juniper Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Hotels has no effect on the direction of Rainbow Childrens i.e., Rainbow Childrens and Juniper Hotels go up and down completely randomly.

Pair Corralation between Rainbow Childrens and Juniper Hotels

Assuming the 90 days trading horizon Rainbow Childrens Medicare is expected to generate 1.06 times more return on investment than Juniper Hotels. However, Rainbow Childrens is 1.06 times more volatile than Juniper Hotels. It trades about 0.2 of its potential returns per unit of risk. Juniper Hotels is currently generating about -0.08 per unit of risk. If you would invest  123,925  in Rainbow Childrens Medicare on August 29, 2024 and sell it today you would earn a total of  40,520  from holding Rainbow Childrens Medicare or generate 32.7% return on investment over 90 days.

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

Rainbow Childrens Medicare  vs.  Juniper Hotels

Rainbow Childrens

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rainbow Childrens Medicare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Rainbow Childrens showed solid returns over the last few months and may actually be approaching a breakup point.

Juniper Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Rainbow Childrens and Juniper Hotels

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

The idea behind Rainbow Childrens Medicare and Juniper 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.