Correlation Between SentinelOne and MicroAlgo

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

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

Diversification Opportunities for SentinelOne and MicroAlgo

-0.34

Correlation Coefficient

SentinelOne  MicroAlgo

Very good diversification

The 3 months correlation between SentinelOne and MicroAlgo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo and SentinelOne 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 SentinelOne are associated (or correlated) with MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of SentinelOne i.e., SentinelOne and MicroAlgo go up and down completely randomly.

Pair Corralation between SentinelOne and MicroAlgo

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.47 times more return on investment than MicroAlgo. However, SentinelOne is 2.14 times less risky than MicroAlgo. It trades about -0.03 of its potential returns per unit of risk. MicroAlgo is currently generating about -0.43 per unit of risk. If you would invest  2,664  in SentinelOne on August 20, 2024 and sell it today you would lose (53.00) from holding SentinelOne or give up 1.99% of portfolio value over 90 days.

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

SentinelOne  vs.  MicroAlgo

SentinelOne

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SentinelOne may actually be approaching a critical reversion point that can send shares even higher in December 2024.

MicroAlgo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroAlgo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SentinelOne and MicroAlgo

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

The idea behind SentinelOne and MicroAlgo 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.