Correlation Between Xos Equity and ECARX Holdings

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

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

Diversification Opportunities for Xos Equity and ECARX Holdings

0.87

Correlation Coefficient

Xos Equity  ECARX Holdings

Very poor diversification

The 3 months correlation between Xos and ECARX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants 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 Xos Equity 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 Xos Equity Warrants 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 Xos Equity i.e., Xos Equity and ECARX Holdings go up and down completely randomly.

Pair Corralation between Xos Equity and ECARX Holdings

Assuming the 90 days horizon Xos Equity is expected to generate 1.17 times less return on investment than ECARX Holdings. In addition to that, Xos Equity is 1.26 times more volatile than ECARX Holdings Warrants. It trades about 0.17 of its total potential returns per unit of risk. ECARX Holdings Warrants is currently generating about 0.24 per unit of volatility. If you would invest  1.63  in ECARX Holdings Warrants on December 2, 2024 and sell it today you would earn a total of  6.37  from holding ECARX Holdings Warrants or generate 390.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	86.67%
Values	Daily Returns

Xos Equity Warrants  vs.  ECARX Holdings Warrants

Xos Equity Warrants

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

ECARX Holdings Warrants

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xos Equity and ECARX Holdings

The main advantage of trading using opposite Xos Equity and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos Equity 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 Xos Equity Warrants 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.

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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.