Correlation Between ADT and Senstar Technologies

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

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

Diversification Opportunities for ADT and Senstar Technologies

-0.08

Correlation Coefficient

ADT  Senstar Technologies

Good diversification

The 3 months correlation between ADT and Senstar is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ADT Inc and Senstar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senstar Technologies and ADT 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 ADT Inc are associated (or correlated) with Senstar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senstar Technologies has no effect on the direction of ADT i.e., ADT and Senstar Technologies go up and down completely randomly.

Pair Corralation between ADT and Senstar Technologies

Considering the 90-day investment horizon ADT Inc is expected to under-perform the Senstar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ADT Inc is 5.42 times less risky than Senstar Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Senstar Technologies is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  158.00  in Senstar Technologies on October 6, 2024 and sell it today you would earn a total of  212.00  from holding Senstar Technologies or generate 134.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

ADT Inc  vs.  Senstar Technologies

ADT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, ADT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Senstar Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senstar Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Senstar Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADT and Senstar Technologies

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

The idea behind ADT Inc and Senstar Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.