Correlation Between CareRay Digital and Xiamen CD

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

Diversification Opportunities for CareRay Digital and Xiamen CD

0.14

Correlation Coefficient

CareRay Digital  Xiamen CD

Average diversification

The 3 months correlation between CareRay and Xiamen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Xiamen CD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen CD 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 Xiamen CD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen CD has no effect on the direction of CareRay Digital i.e., CareRay Digital and Xiamen CD go up and down completely randomly.

Pair Corralation between CareRay Digital and Xiamen CD

Assuming the 90 days trading horizon CareRay Digital Medical is expected to under-perform the Xiamen CD. In addition to that, CareRay Digital is 1.7 times more volatile than Xiamen CD. It trades about -0.02 of its total potential returns per unit of risk. Xiamen CD is currently generating about 0.0 per unit of volatility. If you would invest  1,019  in Xiamen CD on October 9, 2024 and sell it today you would lose (32.00) from holding Xiamen CD or give up 3.14% of portfolio value over 90 days.

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

CareRay Digital Medical  vs.  Xiamen CD

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 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.

Xiamen CD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen CD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen CD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CareRay Digital and Xiamen CD

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

The idea behind CareRay Digital Medical and Xiamen CD 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.