Correlation Between Under Armour and Senmiao Technology

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

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

Diversification Opportunities for Under Armour and Senmiao Technology

-0.22

Correlation Coefficient

Under Armour  Senmiao Technology

Very good diversification

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

Pair Corralation between Under Armour and Senmiao Technology

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the Senmiao Technology. In addition to that, Under Armour is 1.09 times more volatile than Senmiao Technology. It trades about -0.01 of its total potential returns per unit of risk. Senmiao Technology is currently generating about -0.01 per unit of volatility. If you would invest  114.00  in Senmiao Technology on October 3, 2024 and sell it today you would lose (7.00) from holding Senmiao Technology or give up 6.14% of portfolio value over 90 days.

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

Under Armour C  vs.  Senmiao Technology

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Under Armour is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Senmiao Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senmiao Technology has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Under Armour and Senmiao Technology

The main advantage of trading using opposite Under Armour and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.