Correlation Between SenesTech and Orica

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

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

Diversification Opportunities for SenesTech and Orica

-0.06

Correlation Coefficient

SenesTech  Orica

Good diversification

The 3 months correlation between SenesTech and Orica is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SenesTech and Orica Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Ltd ADR and SenesTech 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 SenesTech are associated (or correlated) with Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Ltd ADR has no effect on the direction of SenesTech i.e., SenesTech and Orica go up and down completely randomly.

Pair Corralation between SenesTech and Orica

Given the investment horizon of 90 days SenesTech is expected to generate 2.05 times more return on investment than Orica. However, SenesTech is 2.05 times more volatile than Orica Ltd ADR. It trades about 0.04 of its potential returns per unit of risk. Orica Ltd ADR is currently generating about 0.01 per unit of risk. If you would invest  292.00  in SenesTech on September 14, 2024 and sell it today you would earn a total of  8.00  from holding SenesTech or generate 2.74% return on investment over 90 days.

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

SenesTech  vs.  Orica Ltd ADR

SenesTech

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SenesTech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, SenesTech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Orica Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orica Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Orica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SenesTech and Orica

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

The idea behind SenesTech and Orica Ltd ADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.