Correlation Between CareRay Digital and Shenzhen Topway

Can any of the company-specific risk be diversified away by investing in both CareRay Digital and Shenzhen Topway 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 Shenzhen Topway 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 Shenzhen Topway Video, you can compare the effects of market volatilities on CareRay Digital and Shenzhen Topway 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 Shenzhen Topway. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareRay Digital and Shenzhen Topway.

Diversification Opportunities for CareRay Digital and Shenzhen Topway

0.95

Correlation Coefficient

CareRay Digital  Shenzhen Topway

Almost no diversification

The 3 months correlation between CareRay and Shenzhen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Shenzhen Topway Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Topway Video 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 Shenzhen Topway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Topway Video has no effect on the direction of CareRay Digital i.e., CareRay Digital and Shenzhen Topway go up and down completely randomly.

Pair Corralation between CareRay Digital and Shenzhen Topway

Assuming the 90 days trading horizon CareRay Digital Medical is expected to generate 0.93 times more return on investment than Shenzhen Topway. However, CareRay Digital Medical is 1.08 times less risky than Shenzhen Topway. It trades about 0.2 of its potential returns per unit of risk. Shenzhen Topway Video is currently generating about 0.19 per unit of risk. If you would invest  1,082  in CareRay Digital Medical on September 3, 2024 and sell it today you would earn a total of  482.00  from holding CareRay Digital Medical or generate 44.55% return on investment over 90 days.

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

CareRay Digital Medical  vs.  Shenzhen Topway Video

CareRay Digital Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CareRay Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Topway Video

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Topway Video are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Topway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CareRay Digital and Shenzhen Topway

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

The idea behind CareRay Digital Medical and Shenzhen Topway Video 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.