Correlation Between Sensen Networks and Caravel Minerals

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

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

Diversification Opportunities for Sensen Networks and Caravel Minerals

-0.55

Correlation Coefficient

Sensen Networks  Caravel Minerals

Excellent diversification

The 3 months correlation between Sensen and Caravel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sensen Networks and Caravel Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravel Minerals 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 Caravel Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravel Minerals has no effect on the direction of Sensen Networks i.e., Sensen Networks and Caravel Minerals go up and down completely randomly.

Pair Corralation between Sensen Networks and Caravel Minerals

Assuming the 90 days trading horizon Sensen Networks is expected to generate 1.29 times more return on investment than Caravel Minerals. However, Sensen Networks is 1.29 times more volatile than Caravel Minerals. It trades about 0.02 of its potential returns per unit of risk. Caravel Minerals is currently generating about 0.02 per unit of risk. If you would invest  5.40  in Sensen Networks on October 11, 2024 and sell it today you would lose (1.80) from holding Sensen Networks or give up 33.33% of portfolio value over 90 days.

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

Sensen Networks  vs.  Caravel Minerals

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.

Caravel Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caravel Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caravel Minerals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sensen Networks and Caravel Minerals

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

The idea behind Sensen Networks and Caravel Minerals 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.