Correlation Between Senmiao Technology and Atlanticus Holdings

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

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

Diversification Opportunities for Senmiao Technology and Atlanticus Holdings

-0.33

Correlation Coefficient

Senmiao Technology  Atlanticus Holdings

Very good diversification

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

Pair Corralation between Senmiao Technology and Atlanticus Holdings

Given the investment horizon of 90 days Senmiao Technology is expected to generate 2.73 times more return on investment than Atlanticus Holdings. However, Senmiao Technology is 2.73 times more volatile than Atlanticus Holdings Corp. It trades about 0.21 of its potential returns per unit of risk. Atlanticus Holdings Corp is currently generating about -0.22 per unit of risk. If you would invest  89.00  in Senmiao Technology on October 1, 2024 and sell it today you would earn a total of  9.00  from holding Senmiao Technology or generate 10.11% 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.  Atlanticus Holdings Corp

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 latest fragile performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Atlanticus Holdings Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Atlanticus Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Senmiao Technology and Atlanticus Holdings

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

The idea behind Senmiao Technology and Atlanticus Holdings Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.