Correlation Between SentinelOne and Alumex PLC

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Can any of the company-specific risk be diversified away by investing in both SentinelOne and Alumex PLC 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 SentinelOne and Alumex PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Alumex PLC, you can compare the effects of market volatilities on SentinelOne and Alumex PLC 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 SentinelOne with a short position of Alumex PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Alumex PLC.

Diversification Opportunities for SentinelOne and Alumex PLC

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SentinelOne and Alumex is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Alumex PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumex PLC and SentinelOne 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 SentinelOne are associated (or correlated) with Alumex PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumex PLC has no effect on the direction of SentinelOne i.e., SentinelOne and Alumex PLC go up and down completely randomly.

Pair Corralation between SentinelOne and Alumex PLC

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Alumex PLC. In addition to that, SentinelOne is 1.11 times more volatile than Alumex PLC. It trades about -0.18 of its total potential returns per unit of risk. Alumex PLC is currently generating about -0.05 per unit of volatility. If you would invest  1,590  in Alumex PLC on November 28, 2024 and sell it today you would lose (40.00) from holding Alumex PLC or give up 2.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy90.91%
ValuesDaily Returns

SentinelOne  vs.  Alumex PLC

 Performance 
       Timeline  
SentinelOne 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Alumex PLC 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Alumex PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alumex PLC sustained solid returns over the last few months and may actually be approaching a breakup point.

SentinelOne and Alumex PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SentinelOne and Alumex PLC

The main advantage of trading using opposite SentinelOne and Alumex PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Alumex PLC 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 Alumex PLC will offset losses from the drop in Alumex PLC's long position.
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The idea behind SentinelOne and Alumex PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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