Correlation Between SentinelOne and China Reinsurance

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

By analyzing existing cross correlation between SentinelOne and China Reinsurance Corp, you can compare the effects of market volatilities on SentinelOne and China Reinsurance 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 China Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and China Reinsurance.

Diversification Opportunities for SentinelOne and China Reinsurance

0.34

Correlation Coefficient

SentinelOne  China Reinsurance

Weak diversification

The 3 months correlation between SentinelOne and China is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and China Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reinsurance Corp 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 China Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reinsurance Corp has no effect on the direction of SentinelOne i.e., SentinelOne and China Reinsurance go up and down completely randomly.

Pair Corralation between SentinelOne and China Reinsurance

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the China Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.63 times less risky than China Reinsurance. The stock trades about -0.06 of its potential returns per unit of risk. The China Reinsurance Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in China Reinsurance Corp on October 23, 2024 and sell it today you would lose (1.00) from holding China Reinsurance Corp or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

SentinelOne  vs.  China Reinsurance Corp

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 latest unsteady 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.

China Reinsurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SentinelOne and China Reinsurance

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

The idea behind SentinelOne and China Reinsurance Corp 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.