Correlation Between Senmiao Technology and Dolphin Entertainment

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

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

Diversification Opportunities for Senmiao Technology and Dolphin Entertainment

0.19

Correlation Coefficient

Senmiao Technology  Dolphin Entertainment

Average diversification

The 3 months correlation between Senmiao and Dolphin is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Senmiao Technology and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment 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 Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Senmiao Technology i.e., Senmiao Technology and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Senmiao Technology and Dolphin Entertainment

Given the investment horizon of 90 days Senmiao Technology is expected to under-perform the Dolphin Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Senmiao Technology is 1.23 times less risky than Dolphin Entertainment. The stock trades about -0.09 of its potential returns per unit of risk. The Dolphin Entertainment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Dolphin Entertainment on September 23, 2024 and sell it today you would lose (17.00) from holding Dolphin Entertainment or give up 13.71% of portfolio value over 90 days.

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

Senmiao Technology  vs.  Dolphin Entertainment

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 fragile 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.

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Senmiao Technology and Dolphin Entertainment

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

The idea behind Senmiao Technology and Dolphin Entertainment 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.