Correlation Between CareRay Digital and Advanced Micro

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

Diversification Opportunities for CareRay Digital and Advanced Micro

0.83

Correlation Coefficient

CareRay Digital  Advanced Micro

Very poor diversification

The 3 months correlation between CareRay and Advanced is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Fabri has no effect on the direction of CareRay Digital i.e., CareRay Digital and Advanced Micro go up and down completely randomly.

Pair Corralation between CareRay Digital and Advanced Micro

Assuming the 90 days trading horizon CareRay Digital is expected to generate 1.6 times less return on investment than Advanced Micro. But when comparing it to its historical volatility, CareRay Digital Medical is 1.33 times less risky than Advanced Micro. It trades about 0.04 of its potential returns per unit of risk. Advanced Micro Fabrication is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16,856  in Advanced Micro Fabrication on October 11, 2024 and sell it today you would earn a total of  1,345  from holding Advanced Micro Fabrication or generate 7.98% return on investment over 90 days.

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

CareRay Digital Medical  vs.  Advanced Micro Fabrication

CareRay Digital Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CareRay Digital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Advanced Micro Fabri

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with CareRay Digital and Advanced Micro

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

The idea behind CareRay Digital Medical and Advanced Micro Fabrication 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.