Correlation Between Jinyu Bio and CareRay Digital

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

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

Diversification Opportunities for Jinyu Bio and CareRay Digital

0.68

Correlation Coefficient

Jinyu Bio  CareRay Digital

Poor diversification

The 3 months correlation between Jinyu and CareRay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Jinyu Bio Technology Co 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 Jinyu Bio 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 Jinyu Bio Technology Co 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 Jinyu Bio i.e., Jinyu Bio and CareRay Digital go up and down completely randomly.

Pair Corralation between Jinyu Bio and CareRay Digital

Assuming the 90 days trading horizon Jinyu Bio Technology Co is expected to under-perform the CareRay Digital. But the stock apears to be less risky and, when comparing its historical volatility, Jinyu Bio Technology Co is 1.45 times less risky than CareRay Digital. The stock trades about -0.03 of its potential returns per unit of risk. The CareRay Digital Medical is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,044  in CareRay Digital Medical on October 4, 2024 and sell it today you would lose (727.00) from holding CareRay Digital Medical or give up 35.57% of portfolio value over 90 days.

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

Jinyu Bio Technology Co  vs.  CareRay Digital Medical

Jinyu Bio Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinyu Bio Technology Co 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

0 of 100

Very Weak

Over the last 90 days CareRay Digital Medical has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Jinyu Bio and CareRay Digital

The main advantage of trading using opposite Jinyu Bio and CareRay Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinyu Bio 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 Jinyu Bio Technology Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.