Correlation Between Blue Coast and Juniper Hotels

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

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

Diversification Opportunities for Blue Coast and Juniper Hotels

-0.1

Correlation Coefficient

Blue Coast  Juniper Hotels

Good diversification

The 3 months correlation between Blue and Juniper is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blue Coast Hotels and Juniper Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Hotels and Blue Coast 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 Blue Coast Hotels 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 Blue Coast i.e., Blue Coast and Juniper Hotels go up and down completely randomly.

Pair Corralation between Blue Coast and Juniper Hotels

Assuming the 90 days trading horizon Blue Coast is expected to generate 5.81 times less return on investment than Juniper Hotels. In addition to that, Blue Coast is 1.05 times more volatile than Juniper Hotels. It trades about 0.02 of its total potential returns per unit of risk. Juniper Hotels is currently generating about 0.11 per unit of volatility. If you would invest  27,820  in Juniper Hotels on April 20, 2025 and sell it today you would earn a total of  4,345  from holding Juniper Hotels or generate 15.62% return on investment over 90 days.

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

Blue Coast Hotels  vs.  Juniper Hotels

Blue Coast Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Blue Coast is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Juniper Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniper Hotels are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Juniper Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Coast and Juniper Hotels

The main advantage of trading using opposite Blue Coast and Juniper Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Coast 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 Blue Coast Hotels 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.