Correlation Between Sensient Technologies and Vitalhub Corp

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

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

Diversification Opportunities for Sensient Technologies and Vitalhub Corp

0.2

Correlation Coefficient

Sensient Technologies  Vitalhub Corp

Modest diversification

The 3 months correlation between Sensient and Vitalhub is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Vitalhub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitalhub 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 Vitalhub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitalhub Corp has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Vitalhub Corp go up and down completely randomly.

Pair Corralation between Sensient Technologies and Vitalhub Corp

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Vitalhub Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 2.14 times less risky than Vitalhub Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Vitalhub Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  728.00  in Vitalhub Corp on September 18, 2024 and sell it today you would earn a total of  77.00  from holding Vitalhub Corp or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Sensient Technologies  vs.  Vitalhub Corp

Sensient Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sensient Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Vitalhub Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitalhub Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, Vitalhub Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensient Technologies and Vitalhub Corp

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

The idea behind Sensient Technologies and Vitalhub 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.