Correlation Between ECARX Holdings and Douglas Dynamics

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

Diversification Opportunities for ECARX Holdings and Douglas Dynamics

0.39

Correlation Coefficient

ECARX Holdings  Douglas Dynamics

Weak diversification

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

Pair Corralation between ECARX Holdings and Douglas Dynamics

Assuming the 90 days horizon ECARX Holdings Warrants is expected to generate 49.6 times more return on investment than Douglas Dynamics. However, ECARX Holdings is 49.6 times more volatile than Douglas Dynamics. It trades about 0.1 of its potential returns per unit of risk. Douglas Dynamics is currently generating about 0.0 per unit of risk. If you would invest  9.75  in ECARX Holdings Warrants on September 14, 2024 and sell it today you would lose (7.15) from holding ECARX Holdings Warrants or give up 73.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	62.6%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Douglas Dynamics

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.

Douglas Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ECARX Holdings and Douglas Dynamics

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

The idea behind ECARX Holdings Warrants and Douglas Dynamics 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.