Correlation Between CareRay Digital and Sieyuan Electric

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

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

Diversification Opportunities for CareRay Digital and Sieyuan Electric

0.46

Correlation Coefficient

CareRay Digital  Sieyuan Electric

Very weak diversification

The 3 months correlation between CareRay and Sieyuan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Sieyuan Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sieyuan Electric and CareRay Digital 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 CareRay Digital Medical are associated (or correlated) with Sieyuan Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sieyuan Electric has no effect on the direction of CareRay Digital i.e., CareRay Digital and Sieyuan Electric go up and down completely randomly.

Pair Corralation between CareRay Digital and Sieyuan Electric

Assuming the 90 days trading horizon CareRay Digital Medical is expected to under-perform the Sieyuan Electric. In addition to that, CareRay Digital is 1.61 times more volatile than Sieyuan Electric Co. It trades about -0.47 of its total potential returns per unit of risk. Sieyuan Electric Co is currently generating about -0.22 per unit of volatility. If you would invest  7,610  in Sieyuan Electric Co on October 8, 2024 and sell it today you would lose (520.00) from holding Sieyuan Electric Co or give up 6.83% of portfolio value over 90 days.

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

CareRay Digital Medical  vs.  Sieyuan Electric Co

CareRay Digital Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareRay Digital Medical 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.

Sieyuan Electric

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CareRay Digital and Sieyuan Electric

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

The idea behind CareRay Digital Medical and Sieyuan Electric 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.