Correlation Between Eve Holding and Lilium NV

Can any of the company-specific risk be diversified away by investing in both Eve Holding and Lilium NV 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 Eve Holding and Lilium NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Eve Holding and Lilium NV

0.7

Correlation Coefficient

Eve Holding  Lilium NV

Poor diversification

The 3 months correlation between Eve and Lilium is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV and Eve Holding 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 Eve Holding are associated (or correlated) with Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of Eve Holding i.e., Eve Holding and Lilium NV go up and down completely randomly.

Pair Corralation between Eve Holding and Lilium NV

Given the investment horizon of 90 days Eve Holding is expected to under-perform the Lilium NV. But the stock apears to be less risky and, when comparing its historical volatility, Eve Holding is 3.31 times less risky than Lilium NV. The stock trades about -0.13 of its potential returns per unit of risk. The Lilium NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Lilium NV on December 28, 2024 and sell it today you would lose (11.59) from holding Lilium NV or give up 64.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eve Holding  vs.  Lilium NV

Eve Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eve Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lilium NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lilium NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eve Holding and Lilium NV

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

The idea behind Eve Holding and Lilium NV 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.