Correlation Between CareRay Digital and Xiamen Bank

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

Diversification Opportunities for CareRay Digital and Xiamen Bank

0.29

Correlation Coefficient

CareRay Digital  Xiamen Bank

Modest diversification

The 3 months correlation between CareRay and Xiamen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Xiamen Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Bank 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 Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Bank has no effect on the direction of CareRay Digital i.e., CareRay Digital and Xiamen Bank go up and down completely randomly.

Pair Corralation between CareRay Digital and Xiamen Bank

Assuming the 90 days trading horizon CareRay Digital Medical is expected to generate 1.57 times more return on investment than Xiamen Bank. However, CareRay Digital is 1.57 times more volatile than Xiamen Bank Co. It trades about 0.01 of its potential returns per unit of risk. Xiamen Bank Co is currently generating about -0.11 per unit of risk. If you would invest  1,405  in CareRay Digital Medical on October 22, 2024 and sell it today you would earn a total of  1.00  from holding CareRay Digital Medical or generate 0.07% return on investment over 90 days.

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

CareRay Digital Medical  vs.  Xiamen Bank Co

CareRay Digital Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 2 (%) 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.

Xiamen Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Bank Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CareRay Digital and Xiamen Bank

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

The idea behind CareRay Digital Medical and Xiamen Bank 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.