Correlation Between Guocheng Mining and IRay Technology

Can any of the company-specific risk be diversified away by investing in both Guocheng Mining and IRay Technology 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 Guocheng Mining and IRay Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guocheng Mining Co and iRay Technology Co, you can compare the effects of market volatilities on Guocheng Mining and IRay Technology 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 Guocheng Mining with a short position of IRay Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guocheng Mining and IRay Technology.

Diversification Opportunities for Guocheng Mining and IRay Technology

0.4

Correlation Coefficient

Guocheng Mining  IRay Technology

Very weak diversification

The 3 months correlation between Guocheng and IRay is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Guocheng Mining Co and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology and Guocheng Mining 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 Guocheng Mining Co are associated (or correlated) with IRay Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRay Technology has no effect on the direction of Guocheng Mining i.e., Guocheng Mining and IRay Technology go up and down completely randomly.

Pair Corralation between Guocheng Mining and IRay Technology

Assuming the 90 days trading horizon Guocheng Mining Co is expected to generate 0.83 times more return on investment than IRay Technology. However, Guocheng Mining Co is 1.21 times less risky than IRay Technology. It trades about 0.01 of its potential returns per unit of risk. iRay Technology Co is currently generating about -0.03 per unit of risk. If you would invest  1,614  in Guocheng Mining Co on September 20, 2024 and sell it today you would lose (140.00) from holding Guocheng Mining Co or give up 8.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Guocheng Mining Co  vs.  iRay Technology Co

Guocheng Mining

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guocheng Mining Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guocheng Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

iRay Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iRay Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IRay Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guocheng Mining and IRay Technology

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

The idea behind Guocheng Mining Co and iRay Technology Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.