Correlation Between Senmiao Technology and Exchange Bankshares

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

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

Diversification Opportunities for Senmiao Technology and Exchange Bankshares

0.32

Correlation Coefficient

Senmiao Technology  Exchange Bankshares

Weak diversification

The 3 months correlation between Senmiao and Exchange is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares 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 Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Exchange Bankshares go up and down completely randomly.

Pair Corralation between Senmiao Technology and Exchange Bankshares

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Exchange Bankshares. In addition to that, Senmiao Technology is 52.61 times more volatile than Exchange Bankshares. It trades about -0.1 of its total potential returns per unit of risk. Exchange Bankshares is currently generating about 0.23 per unit of volatility. If you would invest  4,775  in Exchange Bankshares on October 27, 2024 and sell it today you would earn a total of  15.00  from holding Exchange Bankshares or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Senmiao Technology  vs.  Exchange Bankshares

Senmiao Technology

Risk-Adjusted Performance

1 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Exchange Bankshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Bankshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Exchange Bankshares demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and Exchange Bankshares

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

The idea behind Senmiao Technology and Exchange Bankshares 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.