Correlation Between EZGO Technologies and Ree Automotive

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

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

Diversification Opportunities for EZGO Technologies and Ree Automotive

-0.61

Correlation Coefficient

EZGO Technologies  Ree Automotive

Excellent diversification

The 3 months correlation between EZGO and Ree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding and EZGO Technologies 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 EZGO Technologies are associated (or correlated) with Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and Ree Automotive go up and down completely randomly.

Pair Corralation between EZGO Technologies and Ree Automotive

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Ree Automotive. But the stock apears to be less risky and, when comparing its historical volatility, EZGO Technologies is 1.64 times less risky than Ree Automotive. The stock trades about -0.12 of its potential returns per unit of risk. The Ree Automotive Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Ree Automotive Holding on August 31, 2024 and sell it today you would earn a total of  440.00  from holding Ree Automotive Holding or generate 133.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

EZGO Technologies  vs.  Ree Automotive Holding

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ree Automotive Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ree Automotive Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ree Automotive exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EZGO Technologies and Ree Automotive

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

The idea behind EZGO Technologies and Ree Automotive Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.