Correlation Between Xilong Chemical and CareRay Digital
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By analyzing existing cross correlation between Xilong Chemical Co and CareRay Digital Medical, you can compare the effects of market volatilities on Xilong Chemical and CareRay Digital 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 Xilong Chemical with a short position of CareRay Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xilong Chemical and CareRay Digital.
Diversification Opportunities for Xilong Chemical and CareRay Digital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xilong and CareRay is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xilong Chemical Co and CareRay Digital Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRay Digital Medical and Xilong Chemical 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 Xilong Chemical Co are associated (or correlated) with CareRay Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRay Digital Medical has no effect on the direction of Xilong Chemical i.e., Xilong Chemical and CareRay Digital go up and down completely randomly.
Pair Corralation between Xilong Chemical and CareRay Digital
Assuming the 90 days trading horizon Xilong Chemical is expected to generate 1.81 times less return on investment than CareRay Digital. But when comparing it to its historical volatility, Xilong Chemical Co is 1.01 times less risky than CareRay Digital. It trades about 0.18 of its potential returns per unit of risk. CareRay Digital Medical is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,287 in CareRay Digital Medical on November 7, 2024 and sell it today you would earn a total of 135.00 from holding CareRay Digital Medical or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xilong Chemical Co vs. CareRay Digital Medical
Performance |
| Timeline |
| Xilong Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CareRay Digital Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xilong Chemical and CareRay Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xilong Chemical and CareRay Digital
The main advantage of trading using opposite Xilong Chemical and CareRay Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xilong Chemical position performs unexpectedly, CareRay Digital 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 CareRay Digital will offset losses from the drop in CareRay Digital's long position.The idea behind Xilong Chemical Co and CareRay Digital Medical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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