Correlation Between Sensient Technologies and Rightmove Plc

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

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

Diversification Opportunities for Sensient Technologies and Rightmove Plc

-0.03

Correlation Coefficient

Sensient Technologies  Rightmove Plc

Good diversification

The 3 months correlation between Sensient and Rightmove is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Rightmove plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightmove plc 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 Rightmove Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightmove plc has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Rightmove Plc go up and down completely randomly.

Pair Corralation between Sensient Technologies and Rightmove Plc

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Rightmove Plc. In addition to that, Sensient Technologies is 1.27 times more volatile than Rightmove plc. It trades about -0.13 of its total potential returns per unit of risk. Rightmove plc is currently generating about 0.31 per unit of volatility. If you would invest  762.00  in Rightmove plc on September 21, 2024 and sell it today you would earn a total of  49.00  from holding Rightmove plc or generate 6.43% return on investment over 90 days.

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

Sensient Technologies  vs.  Rightmove plc

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Rightmove plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rightmove plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sensient Technologies and Rightmove Plc

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

The idea behind Sensient Technologies and Rightmove plc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.