Correlation Between ECARX Holdings and Stoneridge

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

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

Diversification Opportunities for ECARX Holdings and Stoneridge

0.07

Correlation Coefficient

ECARX Holdings  Stoneridge

Significant diversification

The 3 months correlation between ECARX and Stoneridge is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Warrants and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge and ECARX Holdings 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 ECARX Holdings Warrants are associated (or correlated) with Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of ECARX Holdings i.e., ECARX Holdings and Stoneridge go up and down completely randomly.

Pair Corralation between ECARX Holdings and Stoneridge

Assuming the 90 days horizon ECARX Holdings Warrants is expected to generate 4.93 times more return on investment than Stoneridge. However, ECARX Holdings is 4.93 times more volatile than Stoneridge. It trades about 0.19 of its potential returns per unit of risk. Stoneridge is currently generating about -0.21 per unit of risk. If you would invest  1.50  in ECARX Holdings Warrants on September 20, 2024 and sell it today you would earn a total of  1.50  from holding ECARX Holdings Warrants or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.97%
Values	Daily Returns

ECARX Holdings Warrants  vs.  Stoneridge

ECARX Holdings Warrants

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 14 (%) 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.

Stoneridge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ECARX Holdings and Stoneridge

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

The idea behind ECARX Holdings Warrants and Stoneridge 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.