Correlation Between Cofoe Medical and CareRay Digital

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

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

Diversification Opportunities for Cofoe Medical and CareRay Digital

0.57

Correlation Coefficient

Cofoe Medical  CareRay Digital

Very weak diversification

The 3 months correlation between Cofoe and CareRay is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cofoe Medical Technology and CareRay Digital Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRay Digital Medical and Cofoe Medical 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 Cofoe Medical Technology are associated (or correlated) with CareRay Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRay Digital Medical has no effect on the direction of Cofoe Medical i.e., Cofoe Medical and CareRay Digital go up and down completely randomly.

Pair Corralation between Cofoe Medical and CareRay Digital

Assuming the 90 days trading horizon Cofoe Medical Technology is expected to generate 0.69 times more return on investment than CareRay Digital. However, Cofoe Medical Technology is 1.45 times less risky than CareRay Digital. It trades about -0.25 of its potential returns per unit of risk. CareRay Digital Medical is currently generating about -0.37 per unit of risk. If you would invest  3,743  in Cofoe Medical Technology on October 10, 2024 and sell it today you would lose (341.00) from holding Cofoe Medical Technology or give up 9.11% of portfolio value over 90 days.

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

Cofoe Medical Technology  vs.  CareRay Digital Medical

Cofoe Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cofoe Medical Technology 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.

CareRay Digital Medical

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Cofoe Medical and CareRay Digital

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

The idea behind Cofoe Medical Technology and CareRay Digital Medical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.