Correlation Between Sensient Technologies and Altaba

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

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

Diversification Opportunities for Sensient Technologies and Altaba

0.0

Correlation Coefficient

Sensient Technologies  Altaba

Pay attention - limited upside

The 3 months correlation between Sensient and Altaba is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Altaba Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altaba Inc 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 Altaba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altaba Inc has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Altaba go up and down completely randomly.

Pair Corralation between Sensient Technologies and Altaba

If you would invest  6,869  in Sensient Technologies on January 31, 2024 and sell it today you would earn a total of  453.00  from holding Sensient Technologies or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sensient Technologies  vs.  Altaba Inc

Sensient Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sensient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Altaba Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altaba Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Altaba is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sensient Technologies and Altaba

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

The idea behind Sensient Technologies and Altaba Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.