Correlation Between Hesai Group and Hyzon Motors

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

By analyzing existing cross correlation between Hesai Group American and Hyzon Motors, you can compare the effects of market volatilities on Hesai Group and Hyzon Motors 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 Hesai Group with a short position of Hyzon Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hesai Group and Hyzon Motors.

Diversification Opportunities for Hesai Group and Hyzon Motors

-0.61

Correlation Coefficient

Hesai Group  Hyzon Motors

Excellent diversification

The 3 months correlation between Hesai and Hyzon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hesai Group American and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors and Hesai Group 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 Hesai Group American are associated (or correlated) with Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Hesai Group i.e., Hesai Group and Hyzon Motors go up and down completely randomly.

Pair Corralation between Hesai Group and Hyzon Motors

Given the investment horizon of 90 days Hesai Group American is expected to generate 1.46 times more return on investment than Hyzon Motors. However, Hesai Group is 1.46 times more volatile than Hyzon Motors. It trades about 0.22 of its potential returns per unit of risk. Hyzon Motors is currently generating about -0.3 per unit of risk. If you would invest  1,076  in Hesai Group American on October 8, 2024 and sell it today you would earn a total of  481.00  from holding Hesai Group American or generate 44.7% return on investment over 90 days.

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

Hesai Group American  vs.  Hyzon Motors

Hesai Group American

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hesai Group and Hyzon Motors

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

The idea behind Hesai Group American and Hyzon Motors 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.