Correlation Between SentinelOne and Central Puerto

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

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

Diversification Opportunities for SentinelOne and Central Puerto

-0.23

Correlation Coefficient

SentinelOne  Central Puerto

Very good diversification

The 3 months correlation between SentinelOne and Central is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA 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 Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of SentinelOne i.e., SentinelOne and Central Puerto go up and down completely randomly.

Pair Corralation between SentinelOne and Central Puerto

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Central Puerto. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.23 times less risky than Central Puerto. The stock trades about -0.18 of its potential returns per unit of risk. The Central Puerto SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,351  in Central Puerto SA on November 28, 2024 and sell it today you would lose (127.00) from holding Central Puerto SA or give up 9.4% of portfolio value over 90 days.

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

SentinelOne  vs.  Central Puerto SA

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.

Central Puerto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Puerto SA 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 SentinelOne and Central Puerto

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

The idea behind SentinelOne and Central Puerto SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.