Correlation Between Senmiao Technology and Garmin

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

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

Diversification Opportunities for Senmiao Technology and Garmin

-0.25

Correlation Coefficient

Senmiao Technology  Garmin

Very good diversification

The 3 months correlation between Senmiao and Garmin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin 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 Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Garmin go up and down completely randomly.

Pair Corralation between Senmiao Technology and Garmin

Given the investment horizon of 90 days Senmiao Technology is expected to generate 3.09 times more return on investment than Garmin. However, Senmiao Technology is 3.09 times more volatile than Garmin. It trades about 0.21 of its potential returns per unit of risk. Garmin is currently generating about -0.24 per unit of risk. If you would invest  91.00  in Senmiao Technology on October 7, 2024 and sell it today you would earn a total of  12.00  from holding Senmiao Technology or generate 13.19% 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.  Garmin

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.

Garmin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and Garmin

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

The idea behind Senmiao Technology and Garmin 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.