Correlation Between Xpeng and AYRO

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

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

Diversification Opportunities for Xpeng and AYRO

-0.3

Correlation Coefficient

Xpeng  AYRO

Very good diversification

The 3 months correlation between Xpeng and AYRO is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc and AYRO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYRO Inc and Xpeng 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 Xpeng Inc are associated (or correlated) with AYRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYRO Inc has no effect on the direction of Xpeng i.e., Xpeng and AYRO go up and down completely randomly.

Pair Corralation between Xpeng and AYRO

Given the investment horizon of 90 days Xpeng Inc is expected to generate 2.09 times more return on investment than AYRO. However, Xpeng is 2.09 times more volatile than AYRO Inc. It trades about 0.14 of its potential returns per unit of risk. AYRO Inc is currently generating about -0.05 per unit of risk. If you would invest  897.00  in Xpeng Inc on September 13, 2024 and sell it today you would earn a total of  418.00  from holding Xpeng Inc or generate 46.6% return on investment over 90 days.

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

Xpeng Inc  vs.  AYRO Inc

Xpeng Inc

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xpeng Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Xpeng showed solid returns over the last few months and may actually be approaching a breakup point.

AYRO Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYRO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Xpeng and AYRO

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

The idea behind Xpeng Inc and AYRO Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.