Correlation Between SentinelOne and Addex Therapeutics

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

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

Diversification Opportunities for SentinelOne and Addex Therapeutics

-0.63

Correlation Coefficient

SentinelOne  Addex Therapeutics

Excellent diversification

The 3 months correlation between SentinelOne and Addex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Addex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addex Therapeutics and SentinelOne 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 SentinelOne are associated (or correlated) with Addex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addex Therapeutics has no effect on the direction of SentinelOne i.e., SentinelOne and Addex Therapeutics go up and down completely randomly.

Pair Corralation between SentinelOne and Addex Therapeutics

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.24 times less return on investment than Addex Therapeutics. But when comparing it to its historical volatility, SentinelOne is 2.07 times less risky than Addex Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Addex Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,540  in Addex Therapeutics on January 20, 2024 and sell it today you would lose (5,444) from holding Addex Therapeutics or give up 72.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

SentinelOne  vs.  Addex Therapeutics

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Addex Therapeutics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Addex Therapeutics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Addex Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Addex Therapeutics

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

The idea behind SentinelOne and Addex Therapeutics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..