Correlation Between Senmiao Technology and Belden

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

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

Diversification Opportunities for Senmiao Technology and Belden

-0.3

Correlation Coefficient

Senmiao Technology  Belden

Very good diversification

The 3 months correlation between Senmiao and Belden is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc 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 Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Belden go up and down completely randomly.

Pair Corralation between Senmiao Technology and Belden

Given the investment horizon of 90 days Senmiao Technology is expected to generate 1.71 times more return on investment than Belden. However, Senmiao Technology is 1.71 times more volatile than Belden Inc. It trades about 0.28 of its potential returns per unit of risk. Belden Inc is currently generating about -0.14 per unit of risk. If you would invest  88.00  in Senmiao Technology on October 8, 2024 and sell it today you would earn a total of  15.00  from holding Senmiao Technology or generate 17.05% 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.  Belden Inc

Senmiao Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Belden Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Belden Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Belden 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 Belden

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

The idea behind Senmiao Technology and Belden Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.