Correlation Between Nelnet and Senmiao Technology

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

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

Diversification Opportunities for Nelnet and Senmiao Technology

0.01

Correlation Coefficient

Nelnet  Senmiao Technology

Significant diversification

The 3 months correlation between Nelnet and Senmiao is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Nelnet 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 Nelnet Inc 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 Nelnet i.e., Nelnet and Senmiao Technology go up and down completely randomly.

Pair Corralation between Nelnet and Senmiao Technology

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.48 times more return on investment than Senmiao Technology. However, Nelnet Inc is 2.08 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 -0.05 per unit of risk. If you would invest  11,086  in Nelnet Inc on October 1, 2024 and sell it today you would lose (467.00) from holding Nelnet Inc or give up 4.21% of portfolio value over 90 days.

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

Nelnet Inc  vs.  Senmiao Technology

Nelnet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nelnet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nelnet is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Nelnet and Senmiao Technology

The main advantage of trading using opposite Nelnet and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nelnet 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.

The idea behind Nelnet Inc and Senmiao Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.