Correlation Between Cenntro Electric and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Cenntro Electric and Polestar 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 Cenntro Electric and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenntro Electric Group and Polestar Automotive Holding, you can compare the effects of market volatilities on Cenntro Electric and Polestar 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 Cenntro Electric with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenntro Electric and Polestar Automotive.
Diversification Opportunities for Cenntro Electric and Polestar Automotive
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cenntro and Polestar is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cenntro Electric Group and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and Cenntro Electric 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 Cenntro Electric Group are associated (or correlated) with Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Cenntro Electric i.e., Cenntro Electric and Polestar Automotive go up and down completely randomly.
Pair Corralation between Cenntro Electric and Polestar Automotive
Given the investment horizon of 90 days Cenntro Electric is expected to generate 20.96 times less return on investment than Polestar Automotive. But when comparing it to its historical volatility, Cenntro Electric Group is 2.33 times less risky than Polestar Automotive. It trades about 0.0 of its potential returns per unit of risk. Polestar Automotive Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Polestar Automotive Holding on September 2, 2024 and sell it today you would lose (8.00) from holding Polestar Automotive Holding or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenntro Electric Group vs. Polestar Automotive Holding
Performance |
| Timeline |
| Cenntro Electric |
| Polestar Automotive |
Cenntro Electric and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenntro Electric and Polestar Automotive
The main advantage of trading using opposite Cenntro Electric and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenntro Electric position performs unexpectedly, Polestar 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| Cenntro Electric vs. Mullen Automotive | Cenntro Electric vs. Canoo Inc | Cenntro Electric vs. Hyzon Motors | Cenntro Electric vs. AYRO Inc |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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