Correlation Between Rainbow Childrens and Ganesh Housing

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

Diversification Opportunities for Rainbow Childrens and Ganesh Housing

0.87

Correlation Coefficient

Rainbow Childrens  Ganesh Housing

Very poor diversification

The 3 months correlation between Rainbow and Ganesh is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Childrens Medicare and Ganesh Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganesh Housing 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 Ganesh Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganesh Housing has no effect on the direction of Rainbow Childrens i.e., Rainbow Childrens and Ganesh Housing go up and down completely randomly.

Pair Corralation between Rainbow Childrens and Ganesh Housing

Assuming the 90 days trading horizon Rainbow Childrens Medicare is expected to under-perform the Ganesh Housing. In addition to that, Rainbow Childrens is 1.06 times more volatile than Ganesh Housing. It trades about -0.04 of its total potential returns per unit of risk. Ganesh Housing is currently generating about -0.01 per unit of volatility. If you would invest  119,605  in Ganesh Housing on September 23, 2024 and sell it today you would lose (785.00) from holding Ganesh Housing or give up 0.66% of portfolio value over 90 days.

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

Rainbow Childrens Medicare  vs.  Ganesh Housing

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 uncertain fundamental drivers, Rainbow Childrens showed solid returns over the last few months and may actually be approaching a breakup point.

Ganesh Housing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rainbow Childrens and Ganesh Housing

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

The idea behind Rainbow Childrens Medicare and Ganesh Housing 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.