Correlation Between Senheng New and Magni Tech

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

By analyzing existing cross correlation between Senheng New Retail and Magni Tech Industries, you can compare the effects of market volatilities on Senheng New and Magni Tech 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 Senheng New with a short position of Magni Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and Magni Tech.

Diversification Opportunities for Senheng New and Magni Tech

0.41

Correlation Coefficient

Senheng New  Magni Tech

Very weak diversification

The 3 months correlation between Senheng and Magni is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and Magni Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magni Tech Industries and Senheng New 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 Senheng New Retail are associated (or correlated) with Magni Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magni Tech Industries has no effect on the direction of Senheng New i.e., Senheng New and Magni Tech go up and down completely randomly.

Pair Corralation between Senheng New and Magni Tech

Assuming the 90 days trading horizon Senheng New is expected to generate 8.28 times less return on investment than Magni Tech. In addition to that, Senheng New is 1.92 times more volatile than Magni Tech Industries. It trades about 0.01 of its total potential returns per unit of risk. Magni Tech Industries is currently generating about 0.17 per unit of volatility. If you would invest  255.00  in Magni Tech Industries on September 16, 2024 and sell it today you would earn a total of  31.00  from holding Magni Tech Industries or generate 12.16% return on investment over 90 days.

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

Senheng New Retail  vs.  Magni Tech Industries

Senheng New Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senheng New Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Senheng New is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Magni Tech Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magni Tech Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Magni Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Senheng New and Magni Tech

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

The idea behind Senheng New Retail and Magni Tech Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.