Correlation Between Senmiao Technology and Marchex

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

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

Diversification Opportunities for Senmiao Technology and Marchex

-0.25

Correlation Coefficient

Senmiao Technology  Marchex

Very good diversification

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

Pair Corralation between Senmiao Technology and Marchex

Given the investment horizon of 90 days Senmiao Technology is expected to generate 1.45 times more return on investment than Marchex. However, Senmiao Technology is 1.45 times more volatile than Marchex. It trades about 0.03 of its potential returns per unit of risk. Marchex is currently generating about -0.03 per unit of risk. If you would invest  100.00  in Senmiao Technology on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Senmiao Technology or generate 2.0% 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.  Marchex

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.

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Senmiao Technology and Marchex

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

The idea behind Senmiao Technology and Marchex 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.