Correlation Between Sapiens International and Hesai Group

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

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

Diversification Opportunities for Sapiens International and Hesai Group

0.41

Correlation Coefficient

Sapiens International  Hesai Group

Very weak diversification

The 3 months correlation between Sapiens and Hesai is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Hesai Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hesai Group American and Sapiens International 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 Sapiens International are associated (or correlated) with Hesai Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hesai Group American has no effect on the direction of Sapiens International i.e., Sapiens International and Hesai Group go up and down completely randomly.

Pair Corralation between Sapiens International and Hesai Group

Given the investment horizon of 90 days Sapiens International is expected to generate 9.35 times less return on investment than Hesai Group. But when comparing it to its historical volatility, Sapiens International is 6.01 times less risky than Hesai Group. It trades about 0.04 of its potential returns per unit of risk. Hesai Group American is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Hesai Group American on December 28, 2024 and sell it today you would earn a total of  256.00  from holding Hesai Group American or generate 17.41% return on investment over 90 days.

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

Sapiens International  vs.  Hesai Group American

Sapiens International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sapiens International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hesai Group American

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sapiens International and Hesai Group

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

The idea behind Sapiens International and Hesai Group American 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..