Correlation Between SentinelOne and Indonesia Energy

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

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

Diversification Opportunities for SentinelOne and Indonesia Energy

-0.48

Correlation Coefficient

SentinelOne  Indonesia Energy

Very good diversification

The 3 months correlation between SentinelOne and Indonesia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Indonesia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Energy 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 Indonesia Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Energy has no effect on the direction of SentinelOne i.e., SentinelOne and Indonesia Energy go up and down completely randomly.

Pair Corralation between SentinelOne and Indonesia Energy

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.25 times less return on investment than Indonesia Energy. But when comparing it to its historical volatility, SentinelOne is 2.33 times less risky than Indonesia Energy. It trades about 0.06 of its potential returns per unit of risk. Indonesia Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  427.00  in Indonesia Energy on January 24, 2024 and sell it today you would lose (8.00) from holding Indonesia Energy or give up 1.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.46%
Values	Daily Returns

SentinelOne  vs.  Indonesia Energy

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.

Indonesia Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indonesia Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Indonesia Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Indonesia Energy

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

The idea behind SentinelOne and Indonesia Energy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.