Correlation Between Rivian Automotive and Cenntro Electric

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

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

Diversification Opportunities for Rivian Automotive and Cenntro Electric

0.31

Correlation Coefficient

Rivian Automotive  Cenntro Electric

Weak diversification

The 3 months correlation between Rivian and Cenntro is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Cenntro Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenntro Electric and Rivian Automotive 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 Rivian Automotive are associated (or correlated) with Cenntro Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenntro Electric has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Cenntro Electric go up and down completely randomly.

Pair Corralation between Rivian Automotive and Cenntro Electric

Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.5 times more return on investment than Cenntro Electric. However, Rivian Automotive is 1.5 times more volatile than Cenntro Electric Group. It trades about 0.01 of its potential returns per unit of risk. Cenntro Electric Group is currently generating about -0.26 per unit of risk. If you would invest  1,196  in Rivian Automotive on December 4, 2024 and sell it today you would lose (45.00) from holding Rivian Automotive or give up 3.76% of portfolio value over 90 days.

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

Rivian Automotive  vs.  Cenntro Electric Group

Rivian Automotive

Risk-Adjusted Performance

Weak

Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rivian Automotive is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cenntro Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cenntro Electric Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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 Rivian Automotive and Cenntro Electric

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

The idea behind Rivian Automotive and Cenntro Electric Group 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 CEOs Directory module to screen CEOs from public companies around the world.