Correlation Between Senmiao Technology and Western Digital
Can any of the company-specific risk be diversified away by investing in both Senmiao Technology and Western Digital 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 Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senmiao Technology and Western Digital, you can compare the effects of market volatilities on Senmiao Technology and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senmiao Technology and Western Digital.
Diversification Opportunities for Senmiao Technology and Western Digital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Senmiao and Western is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Western Digital go up and down completely randomly.
Pair Corralation between Senmiao Technology and Western Digital
Given the investment horizon of 90 days Senmiao Technology is expected to generate 2.46 times more return on investment than Western Digital. However, Senmiao Technology is 2.46 times more volatile than Western Digital. It trades about 0.02 of its potential returns per unit of risk. Western Digital is currently generating about 0.05 per unit of risk. If you would invest 95.00 in Senmiao Technology on October 23, 2024 and sell it today you would lose (8.00) from holding Senmiao Technology or give up 8.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senmiao Technology vs. Western Digital
Performance |
| Timeline |
| Senmiao Technology |
| Western Digital |
Senmiao Technology and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senmiao Technology and Western Digital
The main advantage of trading using opposite Senmiao Technology and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senmiao Technology position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.| Senmiao Technology vs. X Financial Class | Senmiao Technology vs. Yirendai | Senmiao Technology vs. Pintec Technology Holdings | Senmiao Technology vs. Qudian Inc |
| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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