Correlation Between Cai Lay and Innovative Technology

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

By analyzing existing cross correlation between Cai Lay Veterinary and Innovative Technology Development, you can compare the effects of market volatilities on Cai Lay and Innovative Technology 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 Cai Lay with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cai Lay and Innovative Technology.

Diversification Opportunities for Cai Lay and Innovative Technology

-0.16

Correlation Coefficient

Cai Lay  Innovative Technology

Good diversification

The 3 months correlation between Cai and Innovative is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cai Lay Veterinary and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Cai Lay 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 Cai Lay Veterinary are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Cai Lay i.e., Cai Lay and Innovative Technology go up and down completely randomly.

Pair Corralation between Cai Lay and Innovative Technology

Assuming the 90 days trading horizon Cai Lay Veterinary is expected to generate 1.65 times more return on investment than Innovative Technology. However, Cai Lay is 1.65 times more volatile than Innovative Technology Development. It trades about 0.07 of its potential returns per unit of risk. Innovative Technology Development is currently generating about 0.07 per unit of risk. If you would invest  900,000  in Cai Lay Veterinary on September 29, 2024 and sell it today you would earn a total of  50,000  from holding Cai Lay Veterinary or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.69%
Values	Daily Returns

Cai Lay Veterinary  vs.  Innovative Technology Developm

Cai Lay Veterinary

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cai Lay Veterinary are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cai Lay displayed solid returns over the last few months and may actually be approaching a breakup point.

Innovative Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Technology Development are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Innovative Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cai Lay and Innovative Technology

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

The idea behind Cai Lay Veterinary and Innovative Technology Development 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 Valuation module to check real value of public entities based on technical and fundamental data.