Correlation Between Cholamandalam Financial and Juniper Hotels

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

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

Diversification Opportunities for Cholamandalam Financial and Juniper Hotels

0.48

Correlation Coefficient

Cholamandalam Financial  Juniper Hotels

Very weak diversification

The 3 months correlation between Cholamandalam and Juniper is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cholamandalam Financial Holdin and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Cholamandalam Financial 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 Cholamandalam Financial Holdings 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 Cholamandalam Financial i.e., Cholamandalam Financial and Juniper Hotels go up and down completely randomly.

Pair Corralation between Cholamandalam Financial and Juniper Hotels

Assuming the 90 days trading horizon Cholamandalam Financial is expected to generate 58.15 times less return on investment than Juniper Hotels. But when comparing it to its historical volatility, Cholamandalam Financial Holdings is 1.19 times less risky than Juniper Hotels. It trades about 0.0 of its potential returns per unit of risk. Juniper Hotels is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  32,320  in Juniper Hotels on September 19, 2024 and sell it today you would earn a total of  3,150  from holding Juniper Hotels or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Cholamandalam Financial Holdin  vs.  Juniper Hotels

Cholamandalam Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cholamandalam Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cholamandalam Financial and Juniper Hotels

The main advantage of trading using opposite Cholamandalam Financial and Juniper Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cholamandalam Financial 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 Cholamandalam Financial Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.