Correlation Between Sensient Technologies and Thunder Power
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Thunder Power 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 Sensient Technologies and Thunder Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Thunder Power Holdings,, you can compare the effects of market volatilities on Sensient Technologies and Thunder Power 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 Sensient Technologies with a short position of Thunder Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Thunder Power.
Diversification Opportunities for Sensient Technologies and Thunder Power
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sensient and Thunder is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Thunder Power Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Power Holdings, and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with Thunder Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Power Holdings, has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Thunder Power go up and down completely randomly.
Pair Corralation between Sensient Technologies and Thunder Power
Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.17 times more return on investment than Thunder Power. However, Sensient Technologies is 6.0 times less risky than Thunder Power. It trades about 0.07 of its potential returns per unit of risk. Thunder Power Holdings, is currently generating about -0.09 per unit of risk. If you would invest 6,026 in Sensient Technologies on September 2, 2024 and sell it today you would earn a total of 1,738 from holding Sensient Technologies or generate 28.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Thunder Power Holdings,
Performance |
| Timeline |
| Sensient Technologies |
| Thunder Power Holdings, |
Sensient Technologies and Thunder Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Thunder Power
The main advantage of trading using opposite Sensient Technologies and Thunder Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Thunder Power 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 Thunder Power will offset losses from the drop in Thunder Power's long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
| Thunder Power vs. Mativ Holdings | Thunder Power vs. Summit Materials | Thunder Power vs. Sensient Technologies | Thunder Power vs. Lion One Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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