Correlation Between Genus Power and Sensata Technologies

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

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

Diversification Opportunities for Genus Power and Sensata Technologies

0.49

Correlation Coefficient

Genus Power  Sensata Technologies

Very weak diversification

The 3 months correlation between Genus and Sensata is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Genus Power Infrastructures and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and Genus Power 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 Genus Power Infrastructures 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 Genus Power i.e., Genus Power and Sensata Technologies go up and down completely randomly.

Pair Corralation between Genus Power and Sensata Technologies

Assuming the 90 days trading horizon Genus Power Infrastructures is expected to under-perform the Sensata Technologies. In addition to that, Genus Power is 1.77 times more volatile than Sensata Technologies Holding. It trades about -0.25 of its total potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.08 per unit of volatility. If you would invest  3,218  in Sensata Technologies Holding on December 1, 2024 and sell it today you would lose (333.00) from holding Sensata Technologies Holding or give up 10.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Genus Power Infrastructures  vs.  Sensata Technologies Holding

Genus Power Infrastr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genus Power Infrastructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sensata Technologies

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Genus Power and Sensata Technologies

The main advantage of trading using opposite Genus Power and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genus Power 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 Genus Power Infrastructures 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.