Correlation Between Zhongshan Broad and IRay Technology

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

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

Diversification Opportunities for Zhongshan Broad and IRay Technology

-0.25

Correlation Coefficient

Zhongshan Broad  IRay Technology

Very good diversification

The 3 months correlation between Zhongshan and IRay is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Zhongshan Broad Ocean Motor and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology and Zhongshan Broad 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 Zhongshan Broad Ocean Motor 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 Zhongshan Broad i.e., Zhongshan Broad and IRay Technology go up and down completely randomly.

Pair Corralation between Zhongshan Broad and IRay Technology

Assuming the 90 days trading horizon Zhongshan Broad Ocean Motor is expected to generate 1.33 times more return on investment than IRay Technology. However, Zhongshan Broad is 1.33 times more volatile than iRay Technology Co. It trades about -0.18 of its potential returns per unit of risk. iRay Technology Co is currently generating about -0.31 per unit of risk. If you would invest  586.00  in Zhongshan Broad Ocean Motor on October 8, 2024 and sell it today you would lose (49.00) from holding Zhongshan Broad Ocean Motor or give up 8.36% of portfolio value over 90 days.

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

Zhongshan Broad Ocean Motor  vs.  iRay Technology Co

Zhongshan Broad Ocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhongshan Broad Ocean Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhongshan Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iRay Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iRay Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhongshan Broad and IRay Technology

The main advantage of trading using opposite Zhongshan Broad and IRay Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongshan Broad 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 Zhongshan Broad Ocean Motor 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.