Correlation Between ODDITY Tech and SentinelOne

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

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

Diversification Opportunities for ODDITY Tech and SentinelOne

0.81

Correlation Coefficient

ODDITY Tech  SentinelOne

Very poor diversification

The 3 months correlation between ODDITY and SentinelOne is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ODDITY Tech Ltd and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and ODDITY Tech 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 ODDITY Tech Ltd are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of ODDITY Tech i.e., ODDITY Tech and SentinelOne go up and down completely randomly.

Pair Corralation between ODDITY Tech and SentinelOne

Considering the 90-day investment horizon ODDITY Tech Ltd is expected to generate 1.23 times more return on investment than SentinelOne. However, ODDITY Tech is 1.23 times more volatile than SentinelOne. It trades about 0.14 of its potential returns per unit of risk. SentinelOne is currently generating about 0.14 per unit of risk. If you would invest  3,606  in ODDITY Tech Ltd on September 1, 2024 and sell it today you would earn a total of  1,040  from holding ODDITY Tech Ltd or generate 28.84% return on investment over 90 days.

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

ODDITY Tech Ltd  vs.  SentinelOne

ODDITY Tech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ODDITY Tech Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ODDITY Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

SentinelOne

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with ODDITY Tech and SentinelOne

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

The idea behind ODDITY Tech Ltd and SentinelOne 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.