Correlation Between Senao International and Group Up
Can any of the company-specific risk be diversified away by investing in both Senao International and Group Up 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 Senao International and Group Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senao International Co and Group Up Industrial, you can compare the effects of market volatilities on Senao International and Group Up 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 Senao International with a short position of Group Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senao International and Group Up.
Diversification Opportunities for Senao International and Group Up
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Senao and Group is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Senao International Co and Group Up Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Up Industrial and Senao International 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 Senao International Co are associated (or correlated) with Group Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Up Industrial has no effect on the direction of Senao International i.e., Senao International and Group Up go up and down completely randomly.
Pair Corralation between Senao International and Group Up
Assuming the 90 days trading horizon Senao International Co is expected to under-perform the Group Up. But the stock apears to be less risky and, when comparing its historical volatility, Senao International Co is 4.25 times less risky than Group Up. The stock trades about -0.12 of its potential returns per unit of risk. The Group Up Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,425 in Group Up Industrial on November 3, 2024 and sell it today you would earn a total of 4,025 from holding Group Up Industrial or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senao International Co vs. Group Up Industrial
Performance |
| Timeline |
| Senao International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Group Up Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Senao International and Group Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senao International and Group Up
The main advantage of trading using opposite Senao International and Group Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senao International position performs unexpectedly, Group Up 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 Group Up will offset losses from the drop in Group Up's long position.The idea behind Senao International Co and Group Up Industrial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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