Correlation Between Senmiao Technology and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Senmiao Technology and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senmiao Technology and SLM Corp Pb, you can compare the effects of market volatilities on Senmiao Technology and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senmiao Technology and SLM Corp.
Diversification Opportunities for Senmiao Technology and SLM Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Senmiao and SLM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp Pb has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and SLM Corp go up and down completely randomly.
Pair Corralation between Senmiao Technology and SLM Corp
Given the investment horizon of 90 days Senmiao Technology is expected to generate 5.66 times more return on investment than SLM Corp. However, Senmiao Technology is 5.66 times more volatile than SLM Corp Pb. It trades about 0.03 of its potential returns per unit of risk. SLM Corp Pb is currently generating about 0.09 per unit of risk. If you would invest 95.00 in Senmiao Technology on August 26, 2024 and sell it today you would lose (2.00) from holding Senmiao Technology or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senmiao Technology vs. SLM Corp Pb
Performance |
| Timeline |
| Senmiao Technology |
| SLM Corp Pb |
Senmiao Technology and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senmiao Technology and SLM Corp
The main advantage of trading using opposite Senmiao Technology and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senmiao Technology position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp's long position.| Senmiao Technology vs. SLM Corp | Senmiao Technology vs. Orix Corp Ads | Senmiao Technology vs. FirstCash | Senmiao Technology vs. Medallion Financial Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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