Correlation Between CareRay Digital and Allgens Medical

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

Diversification Opportunities for CareRay Digital and Allgens Medical

0.49

Correlation Coefficient

CareRay Digital  Allgens Medical

Very weak diversification

The 3 months correlation between CareRay and Allgens is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Allgens Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allgens Medical Tech 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 Allgens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allgens Medical Tech has no effect on the direction of CareRay Digital i.e., CareRay Digital and Allgens Medical go up and down completely randomly.

Pair Corralation between CareRay Digital and Allgens Medical

Assuming the 90 days trading horizon CareRay Digital Medical is expected to generate 1.59 times more return on investment than Allgens Medical. However, CareRay Digital is 1.59 times more volatile than Allgens Medical Technology. It trades about 0.06 of its potential returns per unit of risk. Allgens Medical Technology is currently generating about -0.24 per unit of risk. If you would invest  1,379  in CareRay Digital Medical on October 26, 2024 and sell it today you would earn a total of  33.00  from holding CareRay Digital Medical or generate 2.39% return on investment over 90 days.

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

CareRay Digital Medical  vs.  Allgens Medical Technology

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.

Allgens Medical Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allgens Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Allgens Medical 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 Allgens Medical

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

The idea behind CareRay Digital Medical and Allgens Medical Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.