Correlation Between Cosmos Group and Senmiao Technology

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

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

Diversification Opportunities for Cosmos Group and Senmiao Technology

-0.16

Correlation Coefficient

Cosmos Group  Senmiao Technology

Good diversification

The 3 months correlation between Cosmos and Senmiao is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Group Holdings and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology and Cosmos Group 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 Cosmos Group Holdings 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 Cosmos Group i.e., Cosmos Group and Senmiao Technology go up and down completely randomly.

Pair Corralation between Cosmos Group and Senmiao Technology

Given the investment horizon of 90 days Cosmos Group Holdings is expected to generate 29.58 times more return on investment than Senmiao Technology. However, Cosmos Group is 29.58 times more volatile than Senmiao Technology. It trades about 0.22 of its potential returns per unit of risk. Senmiao Technology is currently generating about 0.03 per unit of risk. If you would invest  0.01  in Cosmos Group Holdings on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Cosmos Group Holdings or generate 50.0% return on investment over 90 days.

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

Cosmos Group Holdings  vs.  Senmiao Technology

Cosmos Group Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Group Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Cosmos Group reported solid returns over the last few months and may actually be approaching a breakup point.

Senmiao Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical indicators, Senmiao Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cosmos Group and Senmiao Technology

The main advantage of trading using opposite Cosmos Group and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos Group 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.

The idea behind Cosmos Group Holdings and Senmiao Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.