Correlation Between Sensen Networks and ApplyDirect

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

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

Diversification Opportunities for Sensen Networks and ApplyDirect

0.3

Correlation Coefficient

Sensen Networks  ApplyDirect

Weak diversification

The 3 months correlation between Sensen and ApplyDirect is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sensen Networks and ApplyDirect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApplyDirect and Sensen Networks 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 Sensen Networks are associated (or correlated) with ApplyDirect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApplyDirect has no effect on the direction of Sensen Networks i.e., Sensen Networks and ApplyDirect go up and down completely randomly.

Pair Corralation between Sensen Networks and ApplyDirect

Assuming the 90 days trading horizon Sensen Networks is expected to under-perform the ApplyDirect. But the stock apears to be less risky and, when comparing its historical volatility, Sensen Networks is 1.61 times less risky than ApplyDirect. The stock trades about -0.14 of its potential returns per unit of risk. The ApplyDirect is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.00  in ApplyDirect on October 10, 2024 and sell it today you would lose (0.20) from holding ApplyDirect or give up 4.0% of portfolio value over 90 days.

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

Sensen Networks  vs.  ApplyDirect

Sensen Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensen Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ApplyDirect

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ApplyDirect are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ApplyDirect may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sensen Networks and ApplyDirect

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

The idea behind Sensen Networks and ApplyDirect 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.