Correlation Between ZKH Group and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both ZKH Group and Sensient Technologies 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 ZKH Group and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZKH Group Limited and Sensient Technologies, you can compare the effects of market volatilities on ZKH Group and Sensient Technologies 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 ZKH Group with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKH Group and Sensient Technologies.
Diversification Opportunities for ZKH Group and Sensient Technologies
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZKH and Sensient is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group Limited and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and ZKH Group 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 ZKH Group Limited are associated (or correlated) with Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of ZKH Group i.e., ZKH Group and Sensient Technologies go up and down completely randomly.
Pair Corralation between ZKH Group and Sensient Technologies
Considering the 90-day investment horizon ZKH Group Limited is expected to generate 2.33 times more return on investment than Sensient Technologies. However, ZKH Group is 2.33 times more volatile than Sensient Technologies. It trades about 0.12 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.07 per unit of risk. If you would invest 294.00 in ZKH Group Limited on September 12, 2024 and sell it today you would earn a total of 71.00 from holding ZKH Group Limited or generate 24.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ZKH Group Limited vs. Sensient Technologies
Performance |
Timeline |
ZKH Group Limited |
Sensient Technologies |
ZKH Group and Sensient Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ZKH Group and Sensient Technologies
The main advantage of trading using opposite ZKH Group and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKH Group position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.ZKH Group vs. iPower Inc | ZKH Group vs. Oriental Culture Holding | ZKH Group vs. PDD Holdings | ZKH Group vs. D MARKET Electronic Services |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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