Correlation Between Dennys Corp and Senmiao Technology
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Senmiao Technology 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 Dennys Corp and Senmiao Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Senmiao Technology, you can compare the effects of market volatilities on Dennys Corp and Senmiao Technology 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 Dennys Corp with a short position of Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Senmiao Technology.
Diversification Opportunities for Dennys Corp and Senmiao Technology
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dennys and Senmiao is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Dennys Corp 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 Dennys Corp are associated (or correlated) with Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Dennys Corp i.e., Dennys Corp and Senmiao Technology go up and down completely randomly.
Pair Corralation between Dennys Corp and Senmiao Technology
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Senmiao Technology. But the stock apears to be less risky and, when comparing its historical volatility, Dennys Corp is 1.34 times less risky than Senmiao Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Senmiao Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Senmiao Technology on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Senmiao Technology or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. Senmiao Technology
Performance |
| Timeline |
| Dennys Corp |
| Senmiao Technology |
Dennys Corp and Senmiao Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Senmiao Technology
The main advantage of trading using opposite Dennys Corp and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Senmiao Technology 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 Senmiao Technology will offset losses from the drop in Senmiao Technology's long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
| Senmiao Technology vs. X Financial Class | Senmiao Technology vs. Yirendai | Senmiao Technology vs. Pintec Technology Holdings | Senmiao Technology vs. Qudian Inc |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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