Correlation Between LM Funding and Senmiao Technology
Can any of the company-specific risk be diversified away by investing in both LM Funding 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 LM Funding and Senmiao Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LM Funding America and Senmiao Technology, you can compare the effects of market volatilities on LM Funding 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 LM Funding with a short position of Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LM Funding and Senmiao Technology.
Diversification Opportunities for LM Funding and Senmiao Technology
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LMFA and Senmiao is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LM Funding America and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and LM Funding 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 LM Funding America 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 LM Funding i.e., LM Funding and Senmiao Technology go up and down completely randomly.
Pair Corralation between LM Funding and Senmiao Technology
Given the investment horizon of 90 days LM Funding America is expected to under-perform the Senmiao Technology. In addition to that, LM Funding is 1.68 times more volatile than Senmiao Technology. It trades about -0.03 of its total potential returns per unit of risk. Senmiao Technology is currently generating about 0.09 per unit of volatility. If you would invest 88.00 in Senmiao Technology on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Senmiao Technology or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LM Funding America vs. Senmiao Technology
Performance |
| Timeline |
| LM Funding America |
| Senmiao Technology |
LM Funding and Senmiao Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LM Funding and Senmiao Technology
The main advantage of trading using opposite LM Funding and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LM Funding 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.| LM Funding vs. X Financial Class | LM Funding vs. Nisun International Enterprise | LM Funding vs. Sentage Holdings | LM Funding vs. Cosmos Group Holdings |
| Senmiao Technology vs. SLM Corp | Senmiao Technology vs. Orix Corp Ads | Senmiao Technology vs. FirstCash | Senmiao Technology vs. Medallion Financial Corp |
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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