Correlation Between Senmiao Technology and WEBUY GLOBAL

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

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

Diversification Opportunities for Senmiao Technology and WEBUY GLOBAL

0.27

Correlation Coefficient

Senmiao Technology  WEBUY GLOBAL

Modest diversification

The 3 months correlation between Senmiao and WEBUY is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and WEBUY GLOBAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBUY GLOBAL LTD 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 WEBUY GLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBUY GLOBAL LTD has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and WEBUY GLOBAL go up and down completely randomly.

Pair Corralation between Senmiao Technology and WEBUY GLOBAL

Given the investment horizon of 90 days Senmiao Technology is expected to generate 0.79 times more return on investment than WEBUY GLOBAL. However, Senmiao Technology is 1.26 times less risky than WEBUY GLOBAL. It trades about -0.07 of its potential returns per unit of risk. WEBUY GLOBAL LTD is currently generating about -0.31 per unit of risk. If you would invest  93.00  in Senmiao Technology on October 25, 2024 and sell it today you would lose (6.00) from holding Senmiao Technology or give up 6.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Senmiao Technology  vs.  WEBUY GLOBAL LTD

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

WEBUY GLOBAL LTD

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Senmiao Technology and WEBUY GLOBAL

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

The idea behind Senmiao Technology and WEBUY GLOBAL LTD 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.