Correlation Between Visa Steel and Juniper Hotels

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

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

Diversification Opportunities for Visa Steel and Juniper Hotels

0.02

Correlation Coefficient

Visa Steel  Juniper Hotels

Significant diversification

The 3 months correlation between Visa and Juniper is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Visa Steel Limited and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Visa Steel 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 Visa Steel 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 Visa Steel i.e., Visa Steel and Juniper Hotels go up and down completely randomly.

Pair Corralation between Visa Steel and Juniper Hotels

Assuming the 90 days trading horizon Visa Steel Limited is expected to generate 1.0 times more return on investment than Juniper Hotels. However, Visa Steel Limited is 1.0 times less risky than Juniper Hotels. It trades about 0.1 of its potential returns per unit of risk. Juniper Hotels is currently generating about -0.02 per unit of risk. If you would invest  1,485  in Visa Steel Limited on October 11, 2024 and sell it today you would earn a total of  3,063  from holding Visa Steel Limited or generate 206.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.33%
Values	Daily Returns

Visa Steel Limited  vs.  Juniper Hotels

Visa Steel Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Steel Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Visa Steel exhibited 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 uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Visa Steel and Juniper Hotels

The main advantage of trading using opposite Visa Steel and Juniper Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa Steel 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 Visa Steel 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.