Correlation Between Capri Holdings and Sentage Holdings

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

By analyzing existing cross correlation between Capri Holdings and Sentage Holdings, you can compare the effects of market volatilities on Capri Holdings and Sentage Holdings 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 Capri Holdings with a short position of Sentage Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Sentage Holdings.

Diversification Opportunities for Capri Holdings and Sentage Holdings

-0.13

Correlation Coefficient

Capri Holdings  Sentage Holdings

Good diversification

The 3 months correlation between Capri and Sentage is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Sentage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentage Holdings and Capri Holdings 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 Capri Holdings are associated (or correlated) with Sentage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentage Holdings has no effect on the direction of Capri Holdings i.e., Capri Holdings and Sentage Holdings go up and down completely randomly.

Pair Corralation between Capri Holdings and Sentage Holdings

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Sentage Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 2.59 times less risky than Sentage Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Sentage Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Sentage Holdings on November 19, 2024 and sell it today you would lose (3.00) from holding Sentage Holdings or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capri Holdings  vs.  Sentage Holdings

Capri Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Capri Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sentage Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sentage Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sentage Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Capri Holdings and Sentage Holdings

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

The idea behind Capri Holdings and Sentage Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.