Correlation Between Xpeng and ECARX Holdings

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

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

Diversification Opportunities for Xpeng and ECARX Holdings

-0.34

Correlation Coefficient

Xpeng  ECARX Holdings

Very good diversification

The 3 months correlation between Xpeng and ECARX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc 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 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 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 Xpeng i.e., Xpeng and ECARX Holdings go up and down completely randomly.

Pair Corralation between Xpeng and ECARX Holdings

Given the investment horizon of 90 days Xpeng is expected to generate 47.42 times less return on investment than ECARX Holdings. But when comparing it to its historical volatility, Xpeng Inc is 35.5 times less risky than ECARX Holdings. It trades about 0.14 of its potential returns per unit of risk. ECARX Holdings Warrants is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1.56  in ECARX Holdings Warrants on September 3, 2024 and sell it today you would earn a total of  0.93  from holding ECARX Holdings Warrants or generate 59.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.88%
Values	Daily Returns

Xpeng Inc  vs.  ECARX Holdings Warrants

Xpeng Inc

Risk-Adjusted Performance

10 of 100

OK

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.

ECARX Holdings Warrants

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days ECARX Holdings Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Xpeng and ECARX Holdings

The main advantage of trading using opposite Xpeng and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpeng 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 Xpeng Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.