Correlation Between Quectel Wireless and CareRay Digital

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

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

Diversification Opportunities for Quectel Wireless and CareRay Digital

-0.29

Correlation Coefficient

Quectel Wireless  CareRay Digital

Very good diversification

The 3 months correlation between Quectel and CareRay is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Quectel Wireless Solutions 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 Quectel Wireless 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 Quectel Wireless Solutions 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 Quectel Wireless i.e., Quectel Wireless and CareRay Digital go up and down completely randomly.

Pair Corralation between Quectel Wireless and CareRay Digital

Assuming the 90 days trading horizon Quectel Wireless is expected to generate 1.82 times less return on investment than CareRay Digital. In addition to that, Quectel Wireless is 3.91 times more volatile than CareRay Digital Medical. It trades about 0.09 of its total potential returns per unit of risk. CareRay Digital Medical is currently generating about 0.62 per unit of volatility. If you would invest  1,406  in CareRay Digital Medical on November 19, 2024 and sell it today you would earn a total of  169.00  from holding CareRay Digital Medical or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Quectel Wireless Solutions  vs.  CareRay Digital Medical

Quectel Wireless Sol

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quectel Wireless Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Quectel Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

CareRay Digital Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 3 (%) 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 Quectel Wireless and CareRay Digital

The main advantage of trading using opposite Quectel Wireless and CareRay Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quectel Wireless 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 Quectel Wireless Solutions 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.