Correlation Between SentinelOne and Hongfa Technology

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

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

Diversification Opportunities for SentinelOne and Hongfa Technology

0.15

Correlation Coefficient

SentinelOne  Hongfa Technology

Average diversification

The 3 months correlation between SentinelOne and Hongfa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Hongfa Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongfa Technology 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 Hongfa Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongfa Technology has no effect on the direction of SentinelOne i.e., SentinelOne and Hongfa Technology go up and down completely randomly.

Pair Corralation between SentinelOne and Hongfa Technology

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Hongfa Technology. In addition to that, SentinelOne is 1.74 times more volatile than Hongfa Technology Co. It trades about -0.14 of its total potential returns per unit of risk. Hongfa Technology Co is currently generating about 0.0 per unit of volatility. If you would invest  3,347  in Hongfa Technology Co on November 28, 2024 and sell it today you would lose (11.00) from holding Hongfa Technology Co or give up 0.33% of portfolio value over 90 days.

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

SentinelOne  vs.  Hongfa Technology Co

SentinelOne

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hongfa Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hongfa Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hongfa Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Hongfa Technology

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

The idea behind SentinelOne and Hongfa Technology 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.