Correlation Between Changjiang Publishing and IRay Technology

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

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

Diversification Opportunities for Changjiang Publishing and IRay Technology

-0.6

Correlation Coefficient

Changjiang Publishing  IRay Technology

Excellent diversification

The 3 months correlation between Changjiang and IRay is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Publishing Media and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology and Changjiang Publishing 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 Changjiang Publishing Media 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 Changjiang Publishing i.e., Changjiang Publishing and IRay Technology go up and down completely randomly.

Pair Corralation between Changjiang Publishing and IRay Technology

Assuming the 90 days trading horizon Changjiang Publishing Media is expected to under-perform the IRay Technology. But the stock apears to be less risky and, when comparing its historical volatility, Changjiang Publishing Media is 1.91 times less risky than IRay Technology. The stock trades about -0.13 of its potential returns per unit of risk. The iRay Technology Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,491  in iRay Technology Co on December 26, 2024 and sell it today you would earn a total of  1,454  from holding iRay Technology Co or generate 15.32% return on investment over 90 days.

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

Changjiang Publishing Media  vs.  iRay Technology Co

Changjiang Publishing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Changjiang Publishing Media 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.

iRay Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iRay Technology Co are ranked lower than 8 (%) 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 Changjiang Publishing and IRay Technology

The main advantage of trading using opposite Changjiang Publishing and IRay Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Publishing 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 Changjiang Publishing Media 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.