Correlation Between SentinelOne and ASM Pacific

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

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

Diversification Opportunities for SentinelOne and ASM Pacific

-0.53

Correlation Coefficient

SentinelOne  ASM Pacific

Excellent diversification

The 3 months correlation between SentinelOne and ASM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and ASM Pacific Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASM Pacific Technology 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 ASM Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASM Pacific Technology has no effect on the direction of SentinelOne i.e., SentinelOne and ASM Pacific go up and down completely randomly.

Pair Corralation between SentinelOne and ASM Pacific

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the ASM Pacific. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.39 times less risky than ASM Pacific. The stock trades about -0.2 of its potential returns per unit of risk. The ASM Pacific Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,100  in ASM Pacific Technology on January 24, 2024 and sell it today you would earn a total of  150.00  from holding ASM Pacific Technology or generate 13.64% return on investment over 90 days.

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

SentinelOne  vs.  ASM Pacific Technology

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.

ASM Pacific Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASM Pacific Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ASM Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and ASM Pacific

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

The idea behind SentinelOne and ASM Pacific 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.