Correlation Between Sensen Networks and Champion Iron

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

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

Diversification Opportunities for Sensen Networks and Champion Iron

0.5

Correlation Coefficient

Sensen Networks  Champion Iron

Very weak diversification

The 3 months correlation between Sensen and Champion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sensen Networks and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Sensen Networks i.e., Sensen Networks and Champion Iron go up and down completely randomly.

Pair Corralation between Sensen Networks and Champion Iron

Assuming the 90 days trading horizon Sensen Networks is expected to generate 2.88 times more return on investment than Champion Iron. However, Sensen Networks is 2.88 times more volatile than Champion Iron. It trades about 0.03 of its potential returns per unit of risk. Champion Iron is currently generating about -0.01 per unit of risk. If you would invest  4.90  in Sensen Networks on October 4, 2024 and sell it today you would lose (1.00) from holding Sensen Networks or give up 20.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sensen Networks  vs.  Champion Iron

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.

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Sensen Networks and Champion Iron

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

The idea behind Sensen Networks and Champion Iron 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.