Correlation Between Commercial Vehicle and ECARX Holdings

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

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

Diversification Opportunities for Commercial Vehicle and ECARX Holdings

0.1

Correlation Coefficient

Commercial Vehicle  ECARX Holdings

Average diversification

The 3 months correlation between Commercial and ECARX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and ECARX Holdings Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Warrants and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Warrants has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and ECARX Holdings go up and down completely randomly.

Pair Corralation between Commercial Vehicle and ECARX Holdings

Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the ECARX Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 4.58 times less risky than ECARX Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The ECARX Holdings Warrants is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.50  in ECARX Holdings Warrants on September 14, 2024 and sell it today you would earn a total of  1.10  from holding ECARX Holdings Warrants or generate 73.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	49.21%
Values	Daily Returns

Commercial Vehicle Group  vs.  ECARX Holdings Warrants

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

ECARX Holdings Warrants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial Vehicle and ECARX Holdings

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

The idea behind Commercial Vehicle Group and ECARX Holdings Warrants 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.