Correlation Between ECARX Holdings and Dorman Products

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

Diversification Opportunities for ECARX Holdings and Dorman Products

-0.39

Correlation Coefficient

ECARX Holdings  Dorman Products

Very good diversification

The 3 months correlation between ECARX and Dorman is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Warrants and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products 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 Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of ECARX Holdings i.e., ECARX Holdings and Dorman Products go up and down completely randomly.

Pair Corralation between ECARX Holdings and Dorman Products

Assuming the 90 days horizon ECARX Holdings Warrants is expected to generate 10.05 times more return on investment than Dorman Products. However, ECARX Holdings is 10.05 times more volatile than Dorman Products. It trades about 0.12 of its potential returns per unit of risk. Dorman Products is currently generating about -0.08 per unit of risk. If you would invest  5.00  in ECARX Holdings Warrants on December 28, 2024 and sell it today you would earn a total of  2.74  from holding ECARX Holdings Warrants or generate 54.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Dorman Products

ECARX Holdings Warrants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 9 (%) 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.

Dorman Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dorman Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ECARX Holdings and Dorman Products

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

The idea behind ECARX Holdings Warrants and Dorman Products 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.