Correlation Between Group Up and Senao Networks

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

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

Diversification Opportunities for Group Up and Senao Networks

-0.66

Correlation Coefficient

Group Up  Senao Networks

Excellent diversification

The 3 months correlation between Group and Senao is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Group Up Industrial and Senao Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senao Networks and Group Up 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 Group Up Industrial are associated (or correlated) with Senao Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senao Networks has no effect on the direction of Group Up i.e., Group Up and Senao Networks go up and down completely randomly.

Pair Corralation between Group Up and Senao Networks

Assuming the 90 days trading horizon Group Up Industrial is expected to generate 1.0 times more return on investment than Senao Networks. However, Group Up Industrial is 1.0 times less risky than Senao Networks. It trades about 0.09 of its potential returns per unit of risk. Senao Networks is currently generating about 0.01 per unit of risk. If you would invest  9,139  in Group Up Industrial on September 17, 2024 and sell it today you would earn a total of  15,911  from holding Group Up Industrial or generate 174.1% return on investment over 90 days.

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

Group Up Industrial  vs.  Senao Networks

Group Up Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Up Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Senao Networks

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Senao Networks are ranked lower than 8 (%) 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.

Pair Trading with Group Up and Senao Networks

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

The idea behind Group Up Industrial and Senao 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.