Correlation Between Senmiao Technology and WuXi AppTec

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

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

Diversification Opportunities for Senmiao Technology and WuXi AppTec

0.23

Correlation Coefficient

Senmiao Technology  WuXi AppTec

Modest diversification

The 3 months correlation between Senmiao and WuXi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and WuXi AppTec go up and down completely randomly.

Pair Corralation between Senmiao Technology and WuXi AppTec

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the WuXi AppTec. In addition to that, Senmiao Technology is 9.75 times more volatile than WuXi AppTec Co. It trades about -0.04 of its total potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.23 per unit of volatility. If you would invest  681.00  in WuXi AppTec Co on October 25, 2024 and sell it today you would lose (12.00) from holding WuXi AppTec Co or give up 1.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Senmiao Technology  vs.  WuXi AppTec Co

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.

WuXi AppTec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, WuXi AppTec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and WuXi AppTec

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

The idea behind Senmiao Technology and WuXi AppTec Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.