Correlation Between Chinese Universe and CareRay Digital

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Can any of the company-specific risk be diversified away by investing in both Chinese Universe and CareRay Digital 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 Chinese Universe and CareRay Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Universe Publishing and CareRay Digital Medical, you can compare the effects of market volatilities on Chinese Universe 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 Chinese Universe with a short position of CareRay Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Universe and CareRay Digital.

Diversification Opportunities for Chinese Universe and CareRay Digital

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Chinese and CareRay is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Universe Publishing 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 Chinese Universe 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 Chinese Universe Publishing 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 Chinese Universe i.e., Chinese Universe and CareRay Digital go up and down completely randomly.

Pair Corralation between Chinese Universe and CareRay Digital

Assuming the 90 days trading horizon Chinese Universe Publishing is expected to generate 0.48 times more return on investment than CareRay Digital. However, Chinese Universe Publishing is 2.06 times less risky than CareRay Digital. It trades about -0.46 of its potential returns per unit of risk. CareRay Digital Medical is currently generating about -0.34 per unit of risk. If you would invest  1,377  in Chinese Universe Publishing on October 12, 2024 and sell it today you would lose (158.00) from holding Chinese Universe Publishing or give up 11.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Chinese Universe Publishing  vs.  CareRay Digital Medical

 Performance 
       Timeline  
Chinese Universe Pub 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chinese Universe Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
CareRay Digital Medical 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CareRay Digital Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Chinese Universe and CareRay Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chinese Universe and CareRay Digital

The main advantage of trading using opposite Chinese Universe and CareRay Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Universe 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.
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The idea behind Chinese Universe Publishing 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.
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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