Correlation Between ECARX Holdings and Optec International

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

Diversification Opportunities for ECARX Holdings and Optec International

-0.35

Correlation Coefficient

ECARX Holdings  Optec International

Very good diversification

The 3 months correlation between ECARX and Optec is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Warrants and Optec International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optec International 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 Optec International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optec International has no effect on the direction of ECARX Holdings i.e., ECARX Holdings and Optec International go up and down completely randomly.

Pair Corralation between ECARX Holdings and Optec International

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	3.33%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Optec International

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.

Optec International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optec International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Optec International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ECARX Holdings and Optec International

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

The idea behind ECARX Holdings Warrants and Optec International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.