Correlation Between XS Financial and Sentage Holdings

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

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

Diversification Opportunities for XS Financial and Sentage Holdings

-0.22

Correlation Coefficient

XS Financial  Sentage Holdings

Very good diversification

The 3 months correlation between XSHLF and Sentage is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding XS Financial and Sentage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentage Holdings and XS Financial 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 XS Financial are associated (or correlated) with Sentage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentage Holdings has no effect on the direction of XS Financial i.e., XS Financial and Sentage Holdings go up and down completely randomly.

Pair Corralation between XS Financial and Sentage Holdings

Assuming the 90 days horizon XS Financial is expected to generate 0.54 times more return on investment than Sentage Holdings. However, XS Financial is 1.86 times less risky than Sentage Holdings. It trades about 0.23 of its potential returns per unit of risk. Sentage Holdings is currently generating about 0.0 per unit of risk. If you would invest  3.60  in XS Financial on September 5, 2024 and sell it today you would earn a total of  0.29  from holding XS Financial or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.69%
Values	Daily Returns

XS Financial  vs.  Sentage Holdings

XS Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days XS Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile essential indicators, XS Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Sentage Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentage Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sentage Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with XS Financial and Sentage Holdings

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

The idea behind XS Financial and Sentage Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..