Correlation Between Sensata Technologies and Risuntek

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

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

Diversification Opportunities for Sensata Technologies and Risuntek

0.07

Correlation Coefficient

Sensata Technologies  Risuntek

Significant diversification

The 3 months correlation between Sensata and Risuntek is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Risuntek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risuntek and Sensata Technologies 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 Sensata Technologies Holding are associated (or correlated) with Risuntek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risuntek has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Risuntek go up and down completely randomly.

Pair Corralation between Sensata Technologies and Risuntek

Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Risuntek. In addition to that, Sensata Technologies is 1.09 times more volatile than Risuntek. It trades about -0.06 of its total potential returns per unit of risk. Risuntek is currently generating about -0.02 per unit of volatility. If you would invest  2,332  in Risuntek on December 31, 2024 and sell it today you would lose (96.00) from holding Risuntek or give up 4.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Sensata Technologies Holding  vs.  Risuntek

Sensata Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sensata Technologies Holding 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.

Risuntek

Risk-Adjusted Performance

Very Weak

Over the last 90 days Risuntek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Risuntek is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sensata Technologies and Risuntek

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

The idea behind Sensata Technologies Holding and Risuntek 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.