Correlation Between Senmiao Technology and Consumer Portfolio

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

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

Diversification Opportunities for Senmiao Technology and Consumer Portfolio

-0.04

Correlation Coefficient

Senmiao Technology  Consumer Portfolio

Good diversification

The 3 months correlation between Senmiao and Consumer is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Consumer Portfolio go up and down completely randomly.

Pair Corralation between Senmiao Technology and Consumer Portfolio

Given the investment horizon of 90 days Senmiao Technology is expected to generate 1.93 times more return on investment than Consumer Portfolio. However, Senmiao Technology is 1.93 times more volatile than Consumer Portfolio Services. It trades about 0.02 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about -0.01 per unit of risk. If you would invest  89.00  in Senmiao Technology on November 28, 2024 and sell it today you would earn a total of  0.03  from holding Senmiao Technology or generate 0.03% 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.  Consumer Portfolio Services

Senmiao Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Consumer Portfolio

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Senmiao Technology and Consumer Portfolio

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

The idea behind Senmiao Technology and Consumer Portfolio Services 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.