Correlation Between RedFlow and Sensata Technologies

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

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

Diversification Opportunities for RedFlow and Sensata Technologies

0.0

Correlation Coefficient

RedFlow  Sensata Technologies

Pay attention - limited upside

The 3 months correlation between RedFlow and Sensata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RedFlow and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and RedFlow 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 RedFlow 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 RedFlow i.e., RedFlow and Sensata Technologies go up and down completely randomly.

Pair Corralation between RedFlow and Sensata Technologies

If you would invest  9.70  in RedFlow on September 2, 2024 and sell it today you would earn a total of  0.00  from holding RedFlow or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

RedFlow  vs.  Sensata Technologies Holding

RedFlow

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 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 RedFlow and Sensata Technologies

The main advantage of trading using opposite RedFlow and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RedFlow 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 RedFlow 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.