Correlation Between CareCloud and Etao International

Can any of the company-specific risk be diversified away by investing in both CareCloud and Etao International 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 CareCloud and Etao International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CareCloud and Etao International Co,, you can compare the effects of market volatilities on CareCloud and Etao International 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 CareCloud with a short position of Etao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareCloud and Etao International.

Diversification Opportunities for CareCloud and Etao International

-0.32

Correlation Coefficient

CareCloud  Etao International

Very good diversification

The 3 months correlation between CareCloud and Etao is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CareCloud and Etao International Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etao International Co, and CareCloud 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 CareCloud are associated (or correlated) with Etao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etao International Co, has no effect on the direction of CareCloud i.e., CareCloud and Etao International go up and down completely randomly.

Pair Corralation between CareCloud and Etao International

Given the investment horizon of 90 days CareCloud is expected to generate 0.42 times more return on investment than Etao International. However, CareCloud is 2.39 times less risky than Etao International. It trades about 0.04 of its potential returns per unit of risk. Etao International Co, is currently generating about -0.02 per unit of risk. If you would invest  312.00  in CareCloud on September 14, 2024 and sell it today you would earn a total of  83.00  from holding CareCloud or generate 26.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.52%
Values	Daily Returns

CareCloud  vs.  Etao International Co,

CareCloud

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, CareCloud exhibited solid returns over the last few months and may actually be approaching a breakup point.

Etao International Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etao International Co, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Etao International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CareCloud and Etao International

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

The idea behind CareCloud and Etao International 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.