Correlation Between Senmiao Technology and SIIC Environment

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

By analyzing existing cross correlation between Senmiao Technology and SIIC Environment Holdings, you can compare the effects of market volatilities on Senmiao Technology and SIIC Environment 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 SIIC Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senmiao Technology and SIIC Environment.

Diversification Opportunities for Senmiao Technology and SIIC Environment

0.84

Correlation Coefficient

Senmiao Technology  SIIC Environment

Very poor diversification

The 3 months correlation between Senmiao and SIIC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and SIIC Environment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIIC Environment Holdings 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 SIIC Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIIC Environment Holdings has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and SIIC Environment go up and down completely randomly.

Pair Corralation between Senmiao Technology and SIIC Environment

If you would invest  15.00  in SIIC Environment Holdings on January 25, 2024 and sell it today you would earn a total of  0.00  from holding SIIC Environment Holdings or generate 0.0% return on investment over 90 days.

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

Senmiao Technology  vs.  SIIC Environment Holdings

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.

SIIC Environment Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIIC Environment Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SIIC Environment may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Senmiao Technology and SIIC Environment

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

The idea behind Senmiao Technology and SIIC Environment Holdings 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.