Correlation Between Workhorse and SES AI

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

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

Diversification Opportunities for Workhorse and SES AI

-0.72

Correlation Coefficient

Workhorse  SES AI

Pay attention - limited upside

The 3 months correlation between Workhorse and SES is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Workhorse Group and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI Corp and Workhorse 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 Workhorse Group are associated (or correlated) with SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of Workhorse i.e., Workhorse and SES AI go up and down completely randomly.

Pair Corralation between Workhorse and SES AI

Given the investment horizon of 90 days Workhorse Group is expected to under-perform the SES AI. But the stock apears to be less risky and, when comparing its historical volatility, Workhorse Group is 1.22 times less risky than SES AI. The stock trades about -0.15 of its potential returns per unit of risk. The SES AI Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  27.00  in SES AI Corp on September 16, 2024 and sell it today you would earn a total of  14.00  from holding SES AI Corp or generate 51.85% return on investment over 90 days.

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

Workhorse Group  vs.  SES AI Corp

Workhorse Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Workhorse Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Workhorse unveiled solid returns over the last few months and may actually be approaching a breakup point.

SES AI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SES AI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Workhorse and SES AI

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

The idea behind Workhorse Group and SES AI Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.