Correlation Between Senmiao Technology and Eason Technology

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

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

Diversification Opportunities for Senmiao Technology and Eason Technology

-0.04

Correlation Coefficient

Senmiao Technology  Eason Technology

Good diversification

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

Pair Corralation between Senmiao Technology and Eason Technology

Given the investment horizon of 90 days Senmiao Technology is expected to generate 5.5 times less return on investment than Eason Technology. But when comparing it to its historical volatility, Senmiao Technology is 7.5 times less risky than Eason Technology. It trades about 0.03 of its potential returns per unit of risk. Eason Technology Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,900  in Eason Technology Limited on December 29, 2024 and sell it today you would lose (2,192) from holding Eason Technology Limited or give up 75.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Senmiao Technology  vs.  Eason Technology Limited

Senmiao Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 2 (%) 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 April 2025.

Eason Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eason Technology Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Eason Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and Eason Technology

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

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