Correlation Between ERecord Management and Sensata Technologies

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

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

Diversification Opportunities for ERecord Management and Sensata Technologies

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Correlation Coefficient

ERecord Management  Sensata Technologies

Pay attention - limited upside

The 3 months correlation between ERecord and Sensata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ERecord Management and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and ERecord Management 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 ERecord Management are associated (or correlated) with Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of ERecord Management i.e., ERecord Management and Sensata Technologies go up and down completely randomly.

Pair Corralation between ERecord Management and Sensata Technologies

Given the investment horizon of 90 days ERecord Management is expected to under-perform the Sensata Technologies. In addition to that, ERecord Management is 2.43 times more volatile than Sensata Technologies Holding. It trades about -0.05 of its total potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.06 per unit of volatility. If you would invest  5,253  in Sensata Technologies Holding on October 24, 2024 and sell it today you would lose (2,377) from holding Sensata Technologies Holding or give up 45.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ERecord Management  vs.  Sensata Technologies Holding

ERecord Management

Risk-Adjusted Performance

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Very Weak

Over the last 90 days ERecord Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, ERecord Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sensata Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensata Technologies Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ERecord Management and Sensata Technologies

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

The idea behind ERecord Management and Sensata Technologies Holding 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.