Correlation Between Asian Hotels and Juniper Hotels

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

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

Diversification Opportunities for Asian Hotels and Juniper Hotels

0.2

Correlation Coefficient

Asian Hotels  Juniper Hotels

Modest diversification

The 3 months correlation between Asian and Juniper is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Asian Hotels 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 Asian Hotels Limited 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 Asian Hotels i.e., Asian Hotels and Juniper Hotels go up and down completely randomly.

Pair Corralation between Asian Hotels and Juniper Hotels

Assuming the 90 days trading horizon Asian Hotels Limited is expected to generate 1.13 times more return on investment than Juniper Hotels. However, Asian Hotels is 1.13 times more volatile than Juniper Hotels. It trades about 0.08 of its potential returns per unit of risk. Juniper Hotels is currently generating about -0.01 per unit of risk. If you would invest  8,155  in Asian Hotels Limited on September 23, 2024 and sell it today you would earn a total of  13,638  from holding Asian Hotels Limited or generate 167.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.63%
Values	Daily Returns

Asian Hotels Limited  vs.  Juniper Hotels

Asian Hotels Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Asian Hotels displayed 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 relatively invariable basic indicators, Juniper Hotels is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Asian Hotels and Juniper Hotels

The main advantage of trading using opposite Asian Hotels and Juniper Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Hotels 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 Asian Hotels Limited 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.