Correlation Between SentinelOne and NOVATECH

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

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

Diversification Opportunities for SentinelOne and NOVATECH

-0.76

Correlation Coefficient

SentinelOne  NOVATECH

Pay attention - limited upside

The 3 months correlation between SentinelOne and NOVATECH is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and NOVATECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVATECH and SentinelOne 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 SentinelOne are associated (or correlated) with NOVATECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVATECH has no effect on the direction of SentinelOne i.e., SentinelOne and NOVATECH go up and down completely randomly.

Pair Corralation between SentinelOne and NOVATECH

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.07 times more return on investment than NOVATECH. However, SentinelOne is 1.07 times more volatile than NOVATECH Co. It trades about 0.04 of its potential returns per unit of risk. NOVATECH Co is currently generating about -0.01 per unit of risk. If you would invest  1,451  in SentinelOne on October 7, 2024 and sell it today you would earn a total of  830.00  from holding SentinelOne or generate 57.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.18%
Values	Daily Returns

SentinelOne  vs.  NOVATECH Co

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

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

NOVATECH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NOVATECH Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NOVATECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and NOVATECH

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

The idea behind SentinelOne and NOVATECH Co 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.