Correlation Between Innoviz Technologies and ECARX Holdings

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

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

Diversification Opportunities for Innoviz Technologies and ECARX Holdings

0.7

Correlation Coefficient

Innoviz Technologies  ECARX Holdings

Poor diversification

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

Pair Corralation between Innoviz Technologies and ECARX Holdings

Given the investment horizon of 90 days Innoviz Technologies is expected to generate 163.02 times less return on investment than ECARX Holdings. But when comparing it to its historical volatility, Innoviz Technologies is 23.64 times less risky than ECARX Holdings. It trades about 0.02 of its potential returns per unit of risk. ECARX Holdings Warrants is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.10  in ECARX Holdings Warrants on October 8, 2024 and sell it today you would earn a total of  2.85  from holding ECARX Holdings Warrants or generate 135.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	60.73%
Values	Daily Returns

Innoviz Technologies  vs.  ECARX Holdings Warrants

Innoviz Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innoviz Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Innoviz Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

ECARX Holdings Warrants

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innoviz Technologies and ECARX Holdings

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

The idea behind Innoviz Technologies and ECARX Holdings Warrants 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.