Correlation Between Ehang Holdings and TFI International

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

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

Diversification Opportunities for Ehang Holdings and TFI International

-0.42

Correlation Coefficient

Ehang Holdings  TFI International

Very good diversification

The 3 months correlation between Ehang and TFI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ehang Holdings and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Ehang 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 Ehang Holdings are associated (or correlated) with TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Ehang Holdings i.e., Ehang Holdings and TFI International go up and down completely randomly.

Pair Corralation between Ehang Holdings and TFI International

Allowing for the 90-day total investment horizon Ehang Holdings is expected to generate 3.05 times more return on investment than TFI International. However, Ehang Holdings is 3.05 times more volatile than TFI International. It trades about 0.04 of its potential returns per unit of risk. TFI International is currently generating about 0.05 per unit of risk. If you would invest  971.00  in Ehang Holdings on September 3, 2024 and sell it today you would earn a total of  581.00  from holding Ehang Holdings or generate 59.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ehang Holdings  vs.  TFI International

Ehang Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ehang Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Ehang Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TFI International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, TFI 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 Ehang Holdings and TFI International

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

The idea behind Ehang Holdings and TFI 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..