Correlation Between Sensient Technologies and ZenaTech

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

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

Diversification Opportunities for Sensient Technologies and ZenaTech

-0.5

Correlation Coefficient

Sensient Technologies  ZenaTech

Very good diversification

The 3 months correlation between Sensient and ZenaTech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and ZenaTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZenaTech 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 ZenaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZenaTech has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and ZenaTech go up and down completely randomly.

Pair Corralation between Sensient Technologies and ZenaTech

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the ZenaTech. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 21.88 times less risky than ZenaTech. The stock trades about -0.03 of its potential returns per unit of risk. The ZenaTech is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  176.00  in ZenaTech on October 23, 2024 and sell it today you would earn a total of  450.00  from holding ZenaTech or generate 255.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Sensient Technologies  vs.  ZenaTech

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 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.

ZenaTech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZenaTech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ZenaTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensient Technologies and ZenaTech

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

The idea behind Sensient Technologies and ZenaTech 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 Stocks Directory module to find actively traded stocks across global markets.