Correlation Between Nasdaq and Sensirion Holding

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

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

Diversification Opportunities for Nasdaq and Sensirion Holding

-0.18

Correlation Coefficient

Nasdaq  Sensirion Holding

Good diversification

The 3 months correlation between Nasdaq and Sensirion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Sensirion Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensirion Holding and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Sensirion Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensirion Holding has no effect on the direction of Nasdaq i.e., Nasdaq and Sensirion Holding go up and down completely randomly.

Pair Corralation between Nasdaq and Sensirion Holding

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Sensirion Holding. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.72 times less risky than Sensirion Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Sensirion Holding AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,540  in Sensirion Holding AG on December 30, 2024 and sell it today you would earn a total of  1,550  from holding Sensirion Holding AG or generate 27.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nasdaq Inc  vs.  Sensirion Holding AG

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Sensirion Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sensirion Holding AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sensirion Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Sensirion Holding

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

The idea behind Nasdaq Inc and Sensirion Holding AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.