Correlation Between Senmiao Technology and Lufax Holding

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

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

Diversification Opportunities for Senmiao Technology and Lufax Holding

-0.16

Correlation Coefficient

Senmiao Technology  Lufax Holding

Good diversification

The 3 months correlation between Senmiao and Lufax is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Lufax Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lufax Holding 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 Lufax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lufax Holding has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Lufax Holding go up and down completely randomly.

Pair Corralation between Senmiao Technology and Lufax Holding

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Lufax Holding. But the stock apears to be less risky and, when comparing its historical volatility, Senmiao Technology is 1.19 times less risky than Lufax Holding. The stock trades about -0.08 of its potential returns per unit of risk. The Lufax Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Lufax Holding on August 30, 2024 and sell it today you would earn a total of  24.00  from holding Lufax Holding or generate 10.57% 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.  Lufax Holding

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 unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lufax Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lufax Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and Lufax Holding

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

The idea behind Senmiao Technology and Lufax Holding 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.