Correlation Between Chambal Fertilizers and Juniper Hotels

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

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

Diversification Opportunities for Chambal Fertilizers and Juniper Hotels

0.59

Correlation Coefficient

Chambal Fertilizers  Juniper Hotels

Very weak diversification

The 3 months correlation between Chambal and Juniper is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chambal Fertilizers Chemicals and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Chambal Fertilizers 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 Chambal Fertilizers Chemicals 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 Chambal Fertilizers i.e., Chambal Fertilizers and Juniper Hotels go up and down completely randomly.

Pair Corralation between Chambal Fertilizers and Juniper Hotels

Assuming the 90 days trading horizon Chambal Fertilizers Chemicals is expected to generate 1.04 times more return on investment than Juniper Hotels. However, Chambal Fertilizers is 1.04 times more volatile than Juniper Hotels. It trades about 0.04 of its potential returns per unit of risk. Juniper Hotels is currently generating about -0.04 per unit of risk. If you would invest  48,546  in Chambal Fertilizers Chemicals on September 23, 2024 and sell it today you would earn a total of  2,369  from holding Chambal Fertilizers Chemicals or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Chambal Fertilizers Chemicals  vs.  Juniper Hotels

Chambal Fertilizers

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chambal Fertilizers Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Chambal Fertilizers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Chambal Fertilizers and Juniper Hotels

The main advantage of trading using opposite Chambal Fertilizers and Juniper Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chambal Fertilizers 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 Chambal Fertilizers Chemicals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.