Correlation Between ECARX Holdings and Adient PLC
Can any of the company-specific risk be diversified away by investing in both ECARX Holdings and Adient PLC 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 Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECARX Holdings Class and Adient PLC, you can compare the effects of market volatilities on ECARX Holdings and Adient PLC 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 Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECARX Holdings and Adient PLC.
Diversification Opportunities for ECARX Holdings and Adient PLC
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ECARX and Adient is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Class and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC 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 Class are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of ECARX Holdings i.e., ECARX Holdings and Adient PLC go up and down completely randomly.
Pair Corralation between ECARX Holdings and Adient PLC
Considering the 90-day investment horizon ECARX Holdings Class is expected to under-perform the Adient PLC. In addition to that, ECARX Holdings is 3.22 times more volatile than Adient PLC. It trades about -0.02 of its total potential returns per unit of risk. Adient PLC is currently generating about -0.04 per unit of volatility. If you would invest 3,681 in Adient PLC on August 26, 2024 and sell it today you would lose (1,747) from holding Adient PLC or give up 47.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECARX Holdings Class vs. Adient PLC
Performance |
| Timeline |
| ECARX Holdings Class |
| Adient PLC |
ECARX Holdings and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECARX Holdings and Adient PLC
The main advantage of trading using opposite ECARX Holdings and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECARX Holdings position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| ECARX Holdings vs. Dorman Products | ECARX Holdings vs. Monro Muffler Brake | ECARX Holdings vs. Standard Motor Products | ECARX Holdings vs. Stoneridge |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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