Correlation Between Sensient Technologies and TMT Acquisition

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

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

Diversification Opportunities for Sensient Technologies and TMT Acquisition

0.02

Correlation Coefficient

Sensient Technologies  TMT Acquisition

Significant diversification

The 3 months correlation between Sensient and TMT is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and TMT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Acquisition Corp and Sensient 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 Sensient Technologies are associated (or correlated) with TMT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Acquisition Corp has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and TMT Acquisition go up and down completely randomly.

Pair Corralation between Sensient Technologies and TMT Acquisition

Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.4 times more return on investment than TMT Acquisition. However, Sensient Technologies is 2.48 times less risky than TMT Acquisition. It trades about 0.01 of its potential returns per unit of risk. TMT Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  7,056  in Sensient Technologies on October 11, 2024 and sell it today you would lose (7.00) from holding Sensient Technologies or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.05%
Values	Daily Returns

Sensient Technologies  vs.  TMT Acquisition Corp

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies 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.

TMT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMT Acquisition Corp 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 fundamental 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.

Pair Trading with Sensient Technologies and TMT Acquisition

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

The idea behind Sensient Technologies and TMT Acquisition Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.