Correlation Between Rainbow Childrens and Byke Hospitality

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

Diversification Opportunities for Rainbow Childrens and Byke Hospitality

-0.19

Correlation Coefficient

Rainbow Childrens  Byke Hospitality

Good diversification

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

Pair Corralation between Rainbow Childrens and Byke Hospitality

Assuming the 90 days trading horizon Rainbow Childrens Medicare is expected to generate 0.72 times more return on investment than Byke Hospitality. However, Rainbow Childrens Medicare is 1.39 times less risky than Byke Hospitality. It trades about 0.04 of its potential returns per unit of risk. The Byke Hospitality is currently generating about 0.01 per unit of risk. If you would invest  128,208  in Rainbow Childrens Medicare on April 4, 2025 and sell it today you would earn a total of  23,572  from holding Rainbow Childrens Medicare or generate 18.39% return on investment over 90 days.

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

Rainbow Childrens Medicare  vs.  The Byke Hospitality

Rainbow Childrens

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rainbow Childrens Medicare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Rainbow Childrens may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Byke Hospitality

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Byke Hospitality may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Rainbow Childrens and Byke Hospitality

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

The idea behind Rainbow Childrens Medicare and The Byke Hospitality 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.