Correlation Between Senmiao Technology and Great Ajax

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

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

Diversification Opportunities for Senmiao Technology and Great Ajax

-0.8

Correlation Coefficient

Senmiao Technology  Great Ajax

Pay attention - limited upside

The 3 months correlation between Senmiao and Great is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp and Senmiao Technology 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 Senmiao Technology are associated (or correlated) with Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Great Ajax go up and down completely randomly.

Pair Corralation between Senmiao Technology and Great Ajax

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Great Ajax. In addition to that, Senmiao Technology is 1.74 times more volatile than Great Ajax Corp. It trades about -0.08 of its total potential returns per unit of risk. Great Ajax Corp is currently generating about -0.1 per unit of volatility. If you would invest  375.00  in Great Ajax Corp on January 25, 2024 and sell it today you would lose (26.50) from holding Great Ajax Corp or give up 7.07% of portfolio value over 90 days.

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

Senmiao Technology  vs.  Great Ajax Corp

Senmiao Technology

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 14 (%) 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.

Great Ajax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Ajax Corp 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 forward-looking indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Senmiao Technology and Great Ajax

The main advantage of trading using opposite Senmiao Technology and Great Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senmiao Technology position performs unexpectedly, Great Ajax 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 Great Ajax will offset losses from the drop in Great Ajax's long position.

The idea behind Senmiao Technology and Great Ajax Corp 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.