Correlation Between IRay Technology and ButOne Information

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

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

Diversification Opportunities for IRay Technology and ButOne Information

0.4

Correlation Coefficient

IRay Technology  ButOne Information

Very weak diversification

The 3 months correlation between IRay and ButOne is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding iRay Technology Co and ButOne Information Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ButOne Information Corp and IRay Technology 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 iRay Technology Co are associated (or correlated) with ButOne Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ButOne Information Corp has no effect on the direction of IRay Technology i.e., IRay Technology and ButOne Information go up and down completely randomly.

Pair Corralation between IRay Technology and ButOne Information

Assuming the 90 days trading horizon iRay Technology Co is expected to under-perform the ButOne Information. But the stock apears to be less risky and, when comparing its historical volatility, iRay Technology Co is 1.2 times less risky than ButOne Information. The stock trades about -0.17 of its potential returns per unit of risk. The ButOne Information Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,156  in ButOne Information Corp on September 20, 2024 and sell it today you would earn a total of  197.00  from holding ButOne Information Corp or generate 9.14% return on investment over 90 days.

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

iRay Technology Co  vs.  ButOne Information Corp

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.

ButOne Information Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ButOne Information Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ButOne Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IRay Technology and ButOne Information

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

The idea behind iRay Technology Co and ButOne Information Corp 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.