Correlation Between Senmiao Technology and Barings BDC

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

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

Diversification Opportunities for Senmiao Technology and Barings BDC

-0.23

Correlation Coefficient

Senmiao Technology  Barings BDC

Very good diversification

The 3 months correlation between Senmiao and Barings is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Senmiao 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 Senmiao Technology are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Barings BDC go up and down completely randomly.

Pair Corralation between Senmiao Technology and Barings BDC

Given the investment horizon of 90 days Senmiao Technology is expected to generate 5.04 times more return on investment than Barings BDC. However, Senmiao Technology is 5.04 times more volatile than Barings BDC. It trades about 0.03 of its potential returns per unit of risk. Barings BDC is currently generating about 0.06 per unit of risk. If you would invest  89.00  in Senmiao Technology on October 12, 2024 and sell it today you would earn a total of  4.00  from holding Senmiao Technology or generate 4.49% return on investment over 90 days.

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

Senmiao Technology  vs.  Barings BDC

Senmiao Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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

Barings BDC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Senmiao Technology and Barings BDC

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

The idea behind Senmiao Technology and Barings BDC 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.