Correlation Between AGNC Investment and Senmiao Technology

Can any of the company-specific risk be diversified away by investing in both AGNC Investment 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 AGNC Investment and Senmiao Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGNC Investment Corp and Senmiao Technology, you can compare the effects of market volatilities on AGNC Investment 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 AGNC Investment with a short position of Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and Senmiao Technology.

Diversification Opportunities for AGNC Investment and Senmiao Technology

0.42

Correlation Coefficient

AGNC Investment  Senmiao Technology

Very weak diversification

The 3 months correlation between AGNC and Senmiao is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and AGNC Investment 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 AGNC Investment 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 AGNC Investment i.e., AGNC Investment and Senmiao Technology go up and down completely randomly.

Pair Corralation between AGNC Investment and Senmiao Technology

Given the investment horizon of 90 days AGNC Investment Corp is expected to generate 0.27 times more return on investment than Senmiao Technology. However, AGNC Investment Corp is 3.67 times less risky than Senmiao Technology. It trades about -0.08 of its potential returns per unit of risk. Senmiao Technology is currently generating about -0.09 per unit of risk. If you would invest  962.00  in AGNC Investment Corp on January 26, 2024 and sell it today you would lose (26.00) from holding AGNC Investment Corp or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AGNC Investment Corp  vs.  Senmiao Technology

AGNC Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGNC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGNC Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Senmiao Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, Senmiao Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGNC Investment and Senmiao Technology

The main advantage of trading using opposite AGNC Investment and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment 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.

The idea behind AGNC Investment Corp and Senmiao Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.