Correlation Between Ehang Holdings and NL Industries
Can any of the company-specific risk be diversified away by investing in both Ehang Holdings and NL Industries 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 Ehang Holdings and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ehang Holdings and NL Industries, you can compare the effects of market volatilities on Ehang Holdings and NL Industries 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 Ehang Holdings with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ehang Holdings and NL Industries.
Diversification Opportunities for Ehang Holdings and NL Industries
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ehang and NL Industries is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ehang Holdings and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and Ehang 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 Ehang Holdings are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Ehang Holdings i.e., Ehang Holdings and NL Industries go up and down completely randomly.
Pair Corralation between Ehang Holdings and NL Industries
Allowing for the 90-day total investment horizon Ehang Holdings is expected to generate 6.84 times less return on investment than NL Industries. In addition to that, Ehang Holdings is 1.6 times more volatile than NL Industries. It trades about 0.01 of its total potential returns per unit of risk. NL Industries is currently generating about 0.09 per unit of volatility. If you would invest 463.00 in NL Industries on August 26, 2024 and sell it today you would earn a total of 348.00 from holding NL Industries or generate 75.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ehang Holdings vs. NL Industries
Performance |
| Timeline |
| Ehang Holdings |
| NL Industries |
Ehang Holdings and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ehang Holdings and NL Industries
The main advantage of trading using opposite Ehang Holdings and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ehang Holdings position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Ehang Holdings vs. Redwire Corp | Ehang Holdings vs. Sidus Space | Ehang Holdings vs. Rocket Lab USA | Ehang Holdings vs. Momentus |
| NL Industries vs. Park Electrochemical | NL Industries vs. Innovative Solutions and | NL Industries vs. Curtiss Wright | NL Industries vs. National Presto Industries |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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