Correlation Between Senao Networks and Wonderful

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

By analyzing existing cross correlation between Senao Networks and Wonderful Hi Tech Co, you can compare the effects of market volatilities on Senao Networks and Wonderful 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 Senao Networks with a short position of Wonderful. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senao Networks and Wonderful.

Diversification Opportunities for Senao Networks and Wonderful

-0.51

Correlation Coefficient

Senao Networks  Wonderful

Excellent diversification

The 3 months correlation between Senao and Wonderful is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Senao Networks and Wonderful Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonderful Hi Tech and Senao Networks 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 Senao Networks are associated (or correlated) with Wonderful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonderful Hi Tech has no effect on the direction of Senao Networks i.e., Senao Networks and Wonderful go up and down completely randomly.

Pair Corralation between Senao Networks and Wonderful

Assuming the 90 days trading horizon Senao Networks is expected to generate 1.72 times more return on investment than Wonderful. However, Senao Networks is 1.72 times more volatile than Wonderful Hi Tech Co. It trades about 0.1 of its potential returns per unit of risk. Wonderful Hi Tech Co is currently generating about -0.02 per unit of risk. If you would invest  17,200  in Senao Networks on September 12, 2024 and sell it today you would earn a total of  3,700  from holding Senao Networks or generate 21.51% return on investment over 90 days.

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

Senao Networks  vs.  Wonderful Hi Tech Co

Senao Networks

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senao Networks are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Senao Networks showed solid returns over the last few months and may actually be approaching a breakup point.

Wonderful Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wonderful Hi Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wonderful is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Senao Networks and Wonderful

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

The idea behind Senao Networks and Wonderful Hi Tech Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.