Correlation Between Lightning EMotors and Austin Engineering

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

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

Diversification Opportunities for Lightning EMotors and Austin Engineering

0.57

Correlation Coefficient

Lightning EMotors  Austin Engineering

Very weak diversification

The 3 months correlation between Lightning and Austin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lightning EMotors and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Lightning EMotors 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 Lightning EMotors are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Lightning EMotors i.e., Lightning EMotors and Austin Engineering go up and down completely randomly.

Pair Corralation between Lightning EMotors and Austin Engineering

If you would invest  30.00  in Austin Engineering Limited on September 22, 2024 and sell it today you would earn a total of  10.00  from holding Austin Engineering Limited or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.27%
Values	Daily Returns

Lightning EMotors  vs.  Austin Engineering Limited

Lightning EMotors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lightning EMotors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Lightning EMotors is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Austin Engineering

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Engineering Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Austin Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lightning EMotors and Austin Engineering

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

The idea behind Lightning EMotors and Austin Engineering Limited 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.