Correlation Between Senmiao Technology and Allient

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

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

Diversification Opportunities for Senmiao Technology and Allient

-0.33

Correlation Coefficient

Senmiao Technology  Allient

Very good diversification

The 3 months correlation between Senmiao and Allient is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Senmiao Technology 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 Senmiao Technology are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Allient go up and down completely randomly.

Pair Corralation between Senmiao Technology and Allient

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Allient. In addition to that, Senmiao Technology is 1.32 times more volatile than Allient. It trades about -0.12 of its total potential returns per unit of risk. Allient is currently generating about 0.13 per unit of volatility. If you would invest  2,089  in Allient on September 17, 2024 and sell it today you would earn a total of  493.00  from holding Allient or generate 23.6% return on investment over 90 days.

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

Senmiao Technology  vs.  Allient

Senmiao Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senmiao Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Allient

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senmiao Technology and Allient

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

The idea behind Senmiao Technology and Allient 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.