Correlation Between Senao Networks and Alpha Networks

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

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

Diversification Opportunities for Senao Networks and Alpha Networks

0.34

Correlation Coefficient

Senao Networks  Alpha Networks

Weak diversification

The 3 months correlation between Senao and Alpha is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Senao Networks and Alpha Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Networks and Senao Networks 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 Senao Networks are associated (or correlated) with Alpha Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Networks has no effect on the direction of Senao Networks i.e., Senao Networks and Alpha Networks go up and down completely randomly.

Pair Corralation between Senao Networks and Alpha Networks

Assuming the 90 days trading horizon Senao Networks is expected to generate 1.44 times more return on investment than Alpha Networks. However, Senao Networks is 1.44 times more volatile than Alpha Networks. It trades about 0.0 of its potential returns per unit of risk. Alpha Networks is currently generating about -0.1 per unit of risk. If you would invest  20,700  in Senao Networks on September 25, 2024 and sell it today you would lose (250.00) from holding Senao Networks or give up 1.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Senao Networks  vs.  Alpha Networks

Senao Networks

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senao Networks are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Senao Networks showed solid returns over the last few months and may actually be approaching a breakup point.

Alpha Networks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Networks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Alpha Networks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Senao Networks and Alpha Networks

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

The idea behind Senao Networks and Alpha Networks 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.