Correlation Between ECD Automotive and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both ECD Automotive and Lotus Technology 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 ECD Automotive and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECD Automotive Design and Lotus Technology Warrants, you can compare the effects of market volatilities on ECD Automotive and Lotus Technology 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 ECD Automotive with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECD Automotive and Lotus Technology.
Diversification Opportunities for ECD Automotive and Lotus Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECD and Lotus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ECD Automotive Design and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and ECD Automotive 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 ECD Automotive Design are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of ECD Automotive i.e., ECD Automotive and Lotus Technology go up and down completely randomly.
Pair Corralation between ECD Automotive and Lotus Technology
Given the investment horizon of 90 days ECD Automotive Design is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, ECD Automotive Design is 2.31 times less risky than Lotus Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Lotus Technology Warrants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Lotus Technology Warrants on August 31, 2024 and sell it today you would lose (44.00) from holding Lotus Technology Warrants or give up 61.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.37% |
| Values | Daily Returns |
ECD Automotive Design vs. Lotus Technology Warrants
Performance |
| Timeline |
| ECD Automotive Design |
| Lotus Technology Warrants |
ECD Automotive and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECD Automotive and Lotus Technology
The main advantage of trading using opposite ECD Automotive and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECD Automotive position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| ECD Automotive vs. PennantPark Floating Rate | ECD Automotive vs. Pintec Technology Holdings | ECD Automotive vs. Marchex | ECD Automotive vs. Stagwell |
| Lotus Technology vs. ZEEKR Intelligent Technology | Lotus Technology vs. Volcon Inc | Lotus Technology vs. ECD Automotive Design | Lotus Technology vs. Ford Motor |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |