Correlation Between Eugene Technology and Ray

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

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

Diversification Opportunities for Eugene Technology and Ray

0.4

Correlation Coefficient

Eugene Technology  Ray

Very weak diversification

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

Pair Corralation between Eugene Technology and Ray

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 0.97 times more return on investment than Ray. However, Eugene Technology CoLtd is 1.03 times less risky than Ray. It trades about -0.04 of its potential returns per unit of risk. Ray Co is currently generating about -0.19 per unit of risk. If you would invest  3,755,000  in Eugene Technology CoLtd on September 5, 2024 and sell it today you would lose (345,000) from holding Eugene Technology CoLtd or give up 9.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Eugene Technology CoLtd  vs.  Ray Co

Eugene Technology CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Technology CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ray Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ray 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eugene Technology and Ray

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

The idea behind Eugene Technology CoLtd and Ray 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.