Correlation Between SES AI and Standard
Can any of the company-specific risk be diversified away by investing in both SES AI and Standard 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 SES AI and Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SES AI Corp and Standard Motor Products, you can compare the effects of market volatilities on SES AI and Standard 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 SES AI with a short position of Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES AI and Standard.
Diversification Opportunities for SES AI and Standard
Good diversification
The 3 months correlation between SES and Standard is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SES AI Corp and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products and SES AI 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 SES AI Corp are associated (or correlated) with Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of SES AI i.e., SES AI and Standard go up and down completely randomly.
Pair Corralation between SES AI and Standard
Considering the 90-day investment horizon SES AI Corp is expected to under-perform the Standard. In addition to that, SES AI is 2.47 times more volatile than Standard Motor Products. It trades about -0.1 of its total potential returns per unit of risk. Standard Motor Products is currently generating about 0.0 per unit of volatility. If you would invest 3,475 in Standard Motor Products on August 26, 2024 and sell it today you would lose (161.00) from holding Standard Motor Products or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SES AI Corp vs. Standard Motor Products
Performance |
| Timeline |
| SES AI Corp |
| Standard Motor Products |
SES AI and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SES AI and Standard
The main advantage of trading using opposite SES AI and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SES AI position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI vs. Stoneridge |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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