Correlation Between Senmiao Technology and Scandinavian Tobacco

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

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

Diversification Opportunities for Senmiao Technology and Scandinavian Tobacco

0.03

Correlation Coefficient

Senmiao Technology  Scandinavian Tobacco

Significant diversification

The 3 months correlation between Senmiao and Scandinavian is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between Senmiao Technology and Scandinavian Tobacco

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Scandinavian Tobacco. In addition to that, Senmiao Technology is 4.87 times more volatile than Scandinavian Tobacco Group. It trades about -0.09 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.07 per unit of volatility. If you would invest  750.00  in Scandinavian Tobacco Group on September 4, 2024 and sell it today you would lose (34.00) from holding Scandinavian Tobacco Group or give up 4.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Senmiao Technology  vs.  Scandinavian Tobacco Group

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 fragile performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Scandinavian Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Tobacco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Scandinavian Tobacco 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 Scandinavian Tobacco

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

The idea behind Senmiao Technology and Scandinavian Tobacco Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.