Correlation Between Nextplat Corp and Senmiao Technology

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

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

Diversification Opportunities for Nextplat Corp and Senmiao Technology

0.48

Correlation Coefficient

Nextplat Corp  Senmiao Technology

Very weak diversification

The 3 months correlation between Nextplat and Senmiao is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Nextplat Corp 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 Nextplat Corp are associated (or correlated) with Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Nextplat Corp i.e., Nextplat Corp and Senmiao Technology go up and down completely randomly.

Pair Corralation between Nextplat Corp and Senmiao Technology

Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the Senmiao Technology. In addition to that, Nextplat Corp is 1.05 times more volatile than Senmiao Technology. It trades about -0.12 of its total potential returns per unit of risk. Senmiao Technology is currently generating about 0.02 per unit of volatility. If you would invest  90.00  in Senmiao Technology on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Senmiao Technology or generate 0.0% return on investment over 90 days.

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

Nextplat Corp  vs.  Senmiao Technology

Nextplat Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextplat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Nextplat Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Senmiao Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Senmiao Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Senmiao Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nextplat Corp and Senmiao Technology

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

The idea behind Nextplat Corp and Senmiao Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.