Correlation Between CareRay Digital and Inner Mongolia

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

Diversification Opportunities for CareRay Digital and Inner Mongolia

0.43

Correlation Coefficient

CareRay Digital  Inner Mongolia

Very weak diversification

The 3 months correlation between CareRay and Inner is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CareRay Digital Medical and Inner Mongolia Yitai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Yitai 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Yitai has no effect on the direction of CareRay Digital i.e., CareRay Digital and Inner Mongolia go up and down completely randomly.

Pair Corralation between CareRay Digital and Inner Mongolia

Assuming the 90 days trading horizon CareRay Digital Medical is expected to generate 1.79 times more return on investment than Inner Mongolia. However, CareRay Digital is 1.79 times more volatile than Inner Mongolia Yitai. It trades about 0.0 of its potential returns per unit of risk. Inner Mongolia Yitai is currently generating about -0.1 per unit of risk. If you would invest  1,445  in CareRay Digital Medical on October 26, 2024 and sell it today you would lose (33.00) from holding CareRay Digital Medical or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CareRay Digital Medical  vs.  Inner Mongolia Yitai

CareRay Digital Medical

Risk-Adjusted Performance

0 of 100

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.

Inner Mongolia Yitai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inner Mongolia Yitai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CareRay Digital and Inner Mongolia

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

The idea behind CareRay Digital Medical and Inner Mongolia Yitai 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.