Correlation Between Sensata Technologies and Shimadzu

Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Shimadzu 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 Shimadzu 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 Shimadzu, you can compare the effects of market volatilities on Sensata Technologies and Shimadzu 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 Shimadzu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Shimadzu.

Diversification Opportunities for Sensata Technologies and Shimadzu

-0.36

Correlation Coefficient

Sensata Technologies  Shimadzu

Very good diversification

The 3 months correlation between Sensata and Shimadzu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Shimadzu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimadzu 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 Shimadzu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimadzu has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Shimadzu go up and down completely randomly.

Pair Corralation between Sensata Technologies and Shimadzu

Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Shimadzu. In addition to that, Sensata Technologies is 2.99 times more volatile than Shimadzu. It trades about -0.05 of its total potential returns per unit of risk. Shimadzu is currently generating about -0.06 per unit of volatility. If you would invest  2,502  in Shimadzu on September 25, 2024 and sell it today you would lose (250.00) from holding Shimadzu or give up 9.99% of portfolio value over 90 days.

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

Sensata Technologies Holding  vs.  Shimadzu

Sensata Technologies

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Shimadzu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimadzu are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shimadzu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sensata Technologies and Shimadzu

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

The idea behind Sensata Technologies Holding and Shimadzu 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.