Correlation Between Chison Medical and CareRay Digital

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

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

Diversification Opportunities for Chison Medical and CareRay Digital

0.91

Correlation Coefficient

Chison Medical  CareRay Digital

Almost no diversification

The 3 months correlation between Chison and CareRay is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chison Medical Technologies 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 Chison Medical 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 Chison Medical Technologies 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 Chison Medical i.e., Chison Medical and CareRay Digital go up and down completely randomly.

Pair Corralation between Chison Medical and CareRay Digital

Assuming the 90 days trading horizon Chison Medical Technologies is expected to generate 0.85 times more return on investment than CareRay Digital. However, Chison Medical Technologies is 1.18 times less risky than CareRay Digital. It trades about 0.04 of its potential returns per unit of risk. CareRay Digital Medical is currently generating about -0.01 per unit of risk. If you would invest  2,548  in Chison Medical Technologies on October 25, 2024 and sell it today you would earn a total of  34.00  from holding Chison Medical Technologies or generate 1.33% return on investment over 90 days.

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

Chison Medical Technologies  vs.  CareRay Digital Medical

Chison Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chison Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Chison Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CareRay Digital Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 1 (%) 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 Chison Medical and CareRay Digital

The main advantage of trading using opposite Chison Medical and CareRay Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chison Medical 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 Chison Medical Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.