Correlation Between Hesai Group and ECARX Holdings

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

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

Diversification Opportunities for Hesai Group and ECARX Holdings

0.49

Correlation Coefficient

Hesai Group  ECARX Holdings

Very weak diversification

The 3 months correlation between Hesai and ECARX is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hesai Group American and ECARX Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Class and Hesai Group 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 Hesai Group American 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 Class has no effect on the direction of Hesai Group i.e., Hesai Group and ECARX Holdings go up and down completely randomly.

Pair Corralation between Hesai Group and ECARX Holdings

Given the investment horizon of 90 days Hesai Group American is expected to generate 1.58 times more return on investment than ECARX Holdings. However, Hesai Group is 1.58 times more volatile than ECARX Holdings Class. It trades about 0.19 of its potential returns per unit of risk. ECARX Holdings Class is currently generating about 0.05 per unit of risk. If you would invest  371.00  in Hesai Group American on September 4, 2024 and sell it today you would earn a total of  393.00  from holding Hesai Group American or generate 105.93% return on investment over 90 days.

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

Hesai Group American  vs.  ECARX Holdings Class

Hesai Group American

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ECARX Holdings Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hesai Group and ECARX Holdings

The main advantage of trading using opposite Hesai Group and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hesai Group 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 Hesai Group American and ECARX Holdings Class 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.