Correlation Between RBC Bearings and Senmiao Technology

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

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

Diversification Opportunities for RBC Bearings and Senmiao Technology

-0.24

Correlation Coefficient

RBC Bearings  Senmiao Technology

Very good diversification

The 3 months correlation between RBC and Senmiao is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and RBC Bearings 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 RBC Bearings Incorporated 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 RBC Bearings i.e., RBC Bearings and Senmiao Technology go up and down completely randomly.

Pair Corralation between RBC Bearings and Senmiao Technology

Considering the 90-day investment horizon RBC Bearings is expected to generate 2.91 times less return on investment than Senmiao Technology. But when comparing it to its historical volatility, RBC Bearings Incorporated is 3.47 times less risky than Senmiao Technology. It trades about 0.04 of its potential returns per unit of risk. Senmiao Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Senmiao Technology on October 13, 2024 and sell it today you would earn a total of  4.00  from holding Senmiao Technology or generate 4.49% return on investment over 90 days.

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

RBC Bearings Incorporated  vs.  Senmiao Technology

RBC Bearings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, RBC Bearings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Senmiao Technology

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 RBC Bearings and Senmiao Technology

The main advantage of trading using opposite RBC Bearings and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings 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 RBC Bearings Incorporated 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.