Correlation Between Arrow Electronics and Senmiao Technology
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Senmiao Technology 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 Arrow Electronics and Senmiao Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Senmiao Technology, you can compare the effects of market volatilities on Arrow Electronics and Senmiao Technology 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 Arrow Electronics with a short position of Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Senmiao Technology.
Diversification Opportunities for Arrow Electronics and Senmiao Technology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arrow and Senmiao is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Arrow Electronics 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 Arrow Electronics are associated (or correlated) with Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Senmiao Technology go up and down completely randomly.
Pair Corralation between Arrow Electronics and Senmiao Technology
Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.34 times more return on investment than Senmiao Technology. However, Arrow Electronics is 2.98 times less risky than Senmiao Technology. It trades about 0.02 of its potential returns per unit of risk. Senmiao Technology is currently generating about -0.08 per unit of risk. If you would invest 12,003 in Arrow Electronics on September 10, 2024 and sell it today you would earn a total of 46.00 from holding Arrow Electronics or generate 0.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Arrow Electronics vs. Senmiao Technology
Performance |
Timeline |
Arrow Electronics |
Senmiao Technology |
Arrow Electronics and Senmiao Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arrow Electronics and Senmiao Technology
The main advantage of trading using opposite Arrow Electronics and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Senmiao Technology 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 Senmiao Technology will offset losses from the drop in Senmiao Technology's long position.Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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