Correlation Between ECARX Holdings and Continental

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

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

Diversification Opportunities for ECARX Holdings and Continental

-0.13

Correlation Coefficient

ECARX Holdings  Continental

Good diversification

The 3 months correlation between ECARX and Continental is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Warrants and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK and ECARX Holdings 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 ECARX Holdings Warrants are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of ECARX Holdings i.e., ECARX Holdings and Continental go up and down completely randomly.

Pair Corralation between ECARX Holdings and Continental

Assuming the 90 days horizon ECARX Holdings Warrants is expected to generate 8.93 times more return on investment than Continental. However, ECARX Holdings is 8.93 times more volatile than Continental AG PK. It trades about 0.18 of its potential returns per unit of risk. Continental AG PK is currently generating about 0.11 per unit of risk. If you would invest  1.50  in ECARX Holdings Warrants on September 13, 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 Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Continental AG PK

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 weak basic indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Continental AG PK

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Continental AG PK are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Continental showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECARX Holdings and Continental

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

The idea behind ECARX Holdings Warrants and Continental AG PK 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.