Correlation Between Juniper Hotels and Tata Motors

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

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

Diversification Opportunities for Juniper Hotels and Tata Motors

0.19

Correlation Coefficient

Juniper Hotels  Tata Motors

Average diversification

The 3 months correlation between Juniper and Tata is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Hotels and Tata Motors Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Motors Limited and Juniper 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 Juniper Hotels are associated (or correlated) with Tata Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Motors Limited has no effect on the direction of Juniper Hotels i.e., Juniper Hotels and Tata Motors go up and down completely randomly.

Pair Corralation between Juniper Hotels and Tata Motors

Assuming the 90 days trading horizon Juniper Hotels is expected to generate 1.55 times more return on investment than Tata Motors. However, Juniper Hotels is 1.55 times more volatile than Tata Motors Limited. It trades about -0.02 of its potential returns per unit of risk. Tata Motors Limited is currently generating about -0.14 per unit of risk. If you would invest  32,815  in Juniper Hotels on October 26, 2024 and sell it today you would lose (1,685) from holding Juniper Hotels or give up 5.13% of portfolio value over 90 days.

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

Juniper Hotels  vs.  Tata Motors Limited

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.

Tata Motors Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Motors Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Juniper Hotels and Tata Motors

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

The idea behind Juniper Hotels and Tata Motors Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.