Correlation Between Envirotech Vehicles and BAIC

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

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

Diversification Opportunities for Envirotech Vehicles and BAIC

-0.47

Correlation Coefficient

Envirotech Vehicles  BAIC

Very good diversification

The 3 months correlation between Envirotech and BAIC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Envirotech Vehicles and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC Motor and Envirotech Vehicles 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 Envirotech Vehicles are associated (or correlated) with BAIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC Motor has no effect on the direction of Envirotech Vehicles i.e., Envirotech Vehicles and BAIC go up and down completely randomly.

Pair Corralation between Envirotech Vehicles and BAIC

Given the investment horizon of 90 days Envirotech Vehicles is expected to under-perform the BAIC. In addition to that, Envirotech Vehicles is 3.11 times more volatile than BAIC Motor. It trades about -0.23 of its total potential returns per unit of risk. BAIC Motor is currently generating about -0.06 per unit of volatility. If you would invest  31.00  in BAIC Motor on December 29, 2024 and sell it today you would lose (4.00) from holding BAIC Motor or give up 12.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Envirotech Vehicles  vs.  BAIC Motor

Envirotech Vehicles

Risk-Adjusted Performance

Very Weak

Over the last 90 days Envirotech Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BAIC Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAIC Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Envirotech Vehicles and BAIC

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

The idea behind Envirotech Vehicles and BAIC Motor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.