Correlation Between Senmiao Technology and X Financial

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

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

Diversification Opportunities for Senmiao Technology and X Financial

-0.23

Correlation Coefficient

Senmiao Technology  X Financial

Very good diversification

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

Pair Corralation between Senmiao Technology and X Financial

Given the investment horizon of 90 days Senmiao Technology is expected to generate 10.75 times less return on investment than X Financial. But when comparing it to its historical volatility, Senmiao Technology is 1.18 times less risky than X Financial. It trades about 0.03 of its potential returns per unit of risk. X Financial Class is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  816.00  in X Financial Class on December 28, 2024 and sell it today you would earn a total of  794.00  from holding X Financial Class or generate 97.3% 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.  X Financial Class

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.

X Financial Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and X Financial

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

The idea behind Senmiao Technology and X Financial Class 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.