Correlation Between Cinda Securities and IRay Technology

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

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

Diversification Opportunities for Cinda Securities and IRay Technology

0.76

Correlation Coefficient

Cinda Securities  IRay Technology

Poor diversification

The 3 months correlation between Cinda and IRay is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cinda Securities Co and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology and Cinda Securities 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 Cinda Securities Co 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 Cinda Securities i.e., Cinda Securities and IRay Technology go up and down completely randomly.

Pair Corralation between Cinda Securities and IRay Technology

Assuming the 90 days trading horizon Cinda Securities Co is expected to generate 0.97 times more return on investment than IRay Technology. However, Cinda Securities Co is 1.03 times less risky than IRay Technology. It trades about 0.03 of its potential returns per unit of risk. iRay Technology Co is currently generating about -0.03 per unit of risk. If you would invest  1,179  in Cinda Securities Co on September 19, 2024 and sell it today you would earn a total of  348.00  from holding Cinda Securities Co or generate 29.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.23%
Values	Daily Returns

Cinda Securities Co  vs.  iRay Technology Co

Cinda Securities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinda Securities Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cinda Securities sustained solid returns over the last few months and may actually be approaching a breakup point.

iRay Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iRay Technology Co are ranked lower than 5 (%) 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 Cinda Securities and IRay Technology

The main advantage of trading using opposite Cinda Securities and IRay Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cinda Securities 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 Cinda Securities Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.