Correlation Between ECARX Holdings and Dana

Can any of the company-specific risk be diversified away by investing in both ECARX Holdings and Dana 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 Dana 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 Dana Inc, you can compare the effects of market volatilities on ECARX Holdings and Dana 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 Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECARX Holdings and Dana.

Diversification Opportunities for ECARX Holdings and Dana

0.1

Correlation Coefficient

ECARX Holdings  Dana

Average diversification

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

Pair Corralation between ECARX Holdings and Dana

Assuming the 90 days horizon ECARX Holdings Warrants is expected to generate 47.99 times more return on investment than Dana. However, ECARX Holdings is 47.99 times more volatile than Dana Inc. It trades about 0.18 of its potential returns per unit of risk. Dana Inc is currently generating about -0.01 per unit of risk. If you would invest  1.56  in ECARX Holdings Warrants on September 2, 2024 and sell it today you would earn a total of  0.93  from holding ECARX Holdings Warrants or generate 59.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	46.88%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Dana Inc

ECARX Holdings Warrants

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days ECARX Holdings Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dana is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ECARX Holdings and Dana

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

The idea behind ECARX Holdings Warrants and Dana 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.