Correlation Between Rainbow Childrens and Osia Hyper

Can any of the company-specific risk be diversified away by investing in both Rainbow Childrens and Osia Hyper 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 Osia Hyper 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 Osia Hyper Retail, you can compare the effects of market volatilities on Rainbow Childrens and Osia Hyper 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 Osia Hyper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainbow Childrens and Osia Hyper.

Diversification Opportunities for Rainbow Childrens and Osia Hyper

-0.77

Correlation Coefficient

Rainbow Childrens  Osia Hyper

Pay attention - limited upside

The 3 months correlation between Rainbow and Osia is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Childrens Medicare and Osia Hyper Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osia Hyper Retail 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 Osia Hyper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osia Hyper Retail has no effect on the direction of Rainbow Childrens i.e., Rainbow Childrens and Osia Hyper go up and down completely randomly.

Pair Corralation between Rainbow Childrens and Osia Hyper

Assuming the 90 days trading horizon Rainbow Childrens Medicare is expected to under-perform the Osia Hyper. But the stock apears to be less risky and, when comparing its historical volatility, Rainbow Childrens Medicare is 1.35 times less risky than Osia Hyper. The stock trades about -0.03 of its potential returns per unit of risk. The Osia Hyper Retail is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,022  in Osia Hyper Retail on September 22, 2024 and sell it today you would earn a total of  52.00  from holding Osia Hyper Retail or generate 1.72% return on investment over 90 days.

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

Rainbow Childrens Medicare  vs.  Osia Hyper Retail

Rainbow Childrens

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rainbow Childrens Medicare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Rainbow Childrens showed solid returns over the last few months and may actually be approaching a breakup point.

Osia Hyper Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osia Hyper Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Rainbow Childrens and Osia Hyper

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

The idea behind Rainbow Childrens Medicare and Osia Hyper Retail 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.