Correlation Between Tradeweb Markets and Senmiao Technology

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

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

Diversification Opportunities for Tradeweb Markets and Senmiao Technology

0.22

Correlation Coefficient

Tradeweb Markets  Senmiao Technology

Modest diversification

The 3 months correlation between Tradeweb and Senmiao is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Senmiao Technology go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Senmiao Technology

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to under-perform the Senmiao Technology. But the stock apears to be less risky and, when comparing its historical volatility, Tradeweb Markets is 2.76 times less risky than Senmiao Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Senmiao Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Senmiao Technology on November 28, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tradeweb Markets  vs.  Senmiao Technology

Tradeweb Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tradeweb Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 Tradeweb Markets and Senmiao Technology

The main advantage of trading using opposite Tradeweb Markets and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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 Tradeweb Markets 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.