Correlation Between Sensient Technologies and Coroware

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

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

Diversification Opportunities for Sensient Technologies and Coroware

-0.08

Correlation Coefficient

Sensient Technologies  Coroware

Good diversification

The 3 months correlation between Sensient and Coroware is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Coroware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coroware and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with Coroware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coroware has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Coroware go up and down completely randomly.

Pair Corralation between Sensient Technologies and Coroware

Considering the 90-day investment horizon Sensient Technologies is expected to generate 4924.1 times less return on investment than Coroware. But when comparing it to its historical volatility, Sensient Technologies is 275.69 times less risky than Coroware. It trades about 0.02 of its potential returns per unit of risk. Coroware is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Coroware on September 15, 2024 and sell it today you would earn a total of  0.01  from holding Coroware or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Sensient Technologies  vs.  Coroware

Sensient Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sensient Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Coroware

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Coroware are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Coroware demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensient Technologies and Coroware

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

The idea behind Sensient Technologies and Coroware 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.