Correlation Between Senmiao Technology and Newell Brands
Can any of the company-specific risk be diversified away by investing in both Senmiao Technology and Newell Brands 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 Newell Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senmiao Technology and Newell Brands, you can compare the effects of market volatilities on Senmiao Technology and Newell Brands 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 Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senmiao Technology and Newell Brands.
Diversification Opportunities for Senmiao Technology and Newell Brands
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Senmiao and Newell is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands 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 Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Newell Brands go up and down completely randomly.
Pair Corralation between Senmiao Technology and Newell Brands
Given the investment horizon of 90 days Senmiao Technology is expected to generate 1.63 times less return on investment than Newell Brands. In addition to that, Senmiao Technology is 2.22 times more volatile than Newell Brands. It trades about 0.04 of its total potential returns per unit of risk. Newell Brands is currently generating about 0.16 per unit of volatility. If you would invest 897.00 in Newell Brands on August 31, 2024 and sell it today you would earn a total of 59.00 from holding Newell Brands or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senmiao Technology vs. Newell Brands
Performance |
| Timeline |
| Senmiao Technology |
| Newell Brands |
Senmiao Technology and Newell Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senmiao Technology and Newell Brands
The main advantage of trading using opposite Senmiao Technology and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senmiao Technology position performs unexpectedly, Newell Brands 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 Newell Brands will offset losses from the drop in Newell Brands' long position.| Senmiao Technology vs. X Financial Class | Senmiao Technology vs. Yirendai | Senmiao Technology vs. Pintec Technology Holdings | Senmiao Technology vs. Qudian Inc |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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