Correlation Between Ally Financial and Senmiao Technology
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Senmiao Technology 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 Ally Financial and Senmiao Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Senmiao Technology, you can compare the effects of market volatilities on Ally Financial and Senmiao Technology 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 Ally Financial with a short position of Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Senmiao Technology.
Diversification Opportunities for Ally Financial and Senmiao Technology
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ally and Senmiao is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Ally Financial 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 Ally Financial are associated (or correlated) with Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Ally Financial i.e., Ally Financial and Senmiao Technology go up and down completely randomly.
Pair Corralation between Ally Financial and Senmiao Technology
Given the investment horizon of 90 days Ally Financial is expected to generate 0.53 times more return on investment than Senmiao Technology. However, Ally Financial is 1.9 times less risky than Senmiao Technology. It trades about 0.03 of its potential returns per unit of risk. Senmiao Technology is currently generating about -0.11 per unit of risk. If you would invest 3,389 in Ally Financial on September 24, 2024 and sell it today you would earn a total of 97.00 from holding Ally Financial or generate 2.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ally Financial vs. Senmiao Technology
Performance |
Timeline |
Ally Financial |
Senmiao Technology |
Ally Financial and Senmiao Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ally Financial and Senmiao Technology
The main advantage of trading using opposite Ally Financial and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Senmiao Technology 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 Senmiao Technology will offset losses from the drop in Senmiao Technology's long position.Ally Financial vs. Visa Class A | Ally Financial vs. Mastercard | Ally Financial vs. Discover Financial Services |
Senmiao Technology vs. Visa Class A | Senmiao Technology vs. Mastercard | Senmiao Technology vs. Ally Financial | Senmiao Technology vs. Discover Financial Services |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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