Correlation Between Trupanion and Senmiao Technology

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

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

Diversification Opportunities for Trupanion and Senmiao Technology

0.05

Correlation Coefficient

Trupanion  Senmiao Technology

Significant diversification

The 3 months correlation between Trupanion and Senmiao is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Trupanion 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 Trupanion are associated (or correlated) with Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Trupanion i.e., Trupanion and Senmiao Technology go up and down completely randomly.

Pair Corralation between Trupanion and Senmiao Technology

Given the investment horizon of 90 days Trupanion is expected to under-perform the Senmiao Technology. In addition to that, Trupanion is 1.12 times more volatile than Senmiao Technology. It trades about -0.14 of its total potential returns per unit of risk. Senmiao Technology is currently generating about 0.02 per unit of volatility. If you would invest  89.00  in Senmiao Technology on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Senmiao Technology or generate 1.12% return on investment over 90 days.

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

Trupanion  vs.  Senmiao Technology

Trupanion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trupanion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Senmiao Technology

Risk-Adjusted Performance

Weak

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

Pair Trading with Trupanion and Senmiao Technology

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

The idea behind Trupanion and Senmiao Technology 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.