Correlation Between Senmiao Technology and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Senmiao Technology and ECD Automotive 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 Senmiao Technology and ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senmiao Technology and ECD Automotive Design, you can compare the effects of market volatilities on Senmiao Technology and ECD Automotive 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 Senmiao Technology with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senmiao Technology and ECD Automotive.
Diversification Opportunities for Senmiao Technology and ECD Automotive
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Senmiao and ECD is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design and Senmiao Technology 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 Senmiao Technology are associated (or correlated) with ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and ECD Automotive go up and down completely randomly.
Pair Corralation between Senmiao Technology and ECD Automotive
Given the investment horizon of 90 days Senmiao Technology is expected to generate 24.54 times less return on investment than ECD Automotive. But when comparing it to its historical volatility, Senmiao Technology is 5.95 times less risky than ECD Automotive. It trades about 0.03 of its potential returns per unit of risk. ECD Automotive Design is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4.00 in ECD Automotive Design on September 12, 2024 and sell it today you would lose (2.35) from holding ECD Automotive Design or give up 58.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 20.2% |
| Values | Daily Returns |
Senmiao Technology vs. ECD Automotive Design
Performance |
| Timeline |
| Senmiao Technology |
| ECD Automotive Design |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Senmiao Technology and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senmiao Technology and ECD Automotive
The main advantage of trading using opposite Senmiao Technology and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senmiao Technology position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| Senmiao Technology vs. Victory Integrity Smallmid Cap | Senmiao Technology vs. Hilton Worldwide Holdings | Senmiao Technology vs. NVIDIA | Senmiao Technology vs. JPMorgan Chase Co |
| ECD Automotive vs. GMS Inc | ECD Automotive vs. Copa Holdings SA | ECD Automotive vs. JetBlue Airways Corp | ECD Automotive vs. Olympic Steel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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