Correlation Between ADLINK Technology and Senao International

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

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

Diversification Opportunities for ADLINK Technology and Senao International

0.61

Correlation Coefficient

ADLINK Technology  Senao International

Poor diversification

The 3 months correlation between ADLINK and Senao is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ADLINK Technology and Senao International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senao International and ADLINK Technology 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 ADLINK Technology are associated (or correlated) with Senao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senao International has no effect on the direction of ADLINK Technology i.e., ADLINK Technology and Senao International go up and down completely randomly.

Pair Corralation between ADLINK Technology and Senao International

Assuming the 90 days trading horizon ADLINK Technology is expected to generate 4.09 times more return on investment than Senao International. However, ADLINK Technology is 4.09 times more volatile than Senao International Co. It trades about 0.14 of its potential returns per unit of risk. Senao International Co is currently generating about 0.14 per unit of risk. If you would invest  7,560  in ADLINK Technology on December 21, 2024 and sell it today you would earn a total of  1,680  from holding ADLINK Technology or generate 22.22% return on investment over 90 days.

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

ADLINK Technology  vs.  Senao International Co

ADLINK Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADLINK Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ADLINK Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Senao International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senao International Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Senao International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ADLINK Technology and Senao International

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

The idea behind ADLINK Technology and Senao 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.