Correlation Between Faraday Future and Cenntro Electric
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Cenntro Electric 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 Faraday Future and Cenntro Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Future Intelligent and Cenntro Electric Group, you can compare the effects of market volatilities on Faraday Future and Cenntro Electric 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 Faraday Future with a short position of Cenntro Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Cenntro Electric.
Diversification Opportunities for Faraday Future and Cenntro Electric
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Faraday and Cenntro is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Cenntro Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenntro Electric and Faraday Future 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 Faraday Future Intelligent are associated (or correlated) with Cenntro Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenntro Electric has no effect on the direction of Faraday Future i.e., Faraday Future and Cenntro Electric go up and down completely randomly.
Pair Corralation between Faraday Future and Cenntro Electric
Given the investment horizon of 90 days Faraday Future Intelligent is expected to generate 3.67 times more return on investment than Cenntro Electric. However, Faraday Future is 3.67 times more volatile than Cenntro Electric Group. It trades about 0.0 of its potential returns per unit of risk. Cenntro Electric Group is currently generating about -0.05 per unit of risk. If you would invest 311,040 in Faraday Future Intelligent on August 28, 2024 and sell it today you would lose (310,898) from holding Faraday Future Intelligent or give up 99.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Cenntro Electric Group
Performance |
| Timeline |
| Faraday Future Intel |
| Cenntro Electric |
Faraday Future and Cenntro Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Cenntro Electric
The main advantage of trading using opposite Faraday Future and Cenntro Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Cenntro Electric 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 Cenntro Electric will offset losses from the drop in Cenntro Electric's long position.The idea behind Faraday Future Intelligent and Cenntro Electric Group 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.| Cenntro Electric vs. Mullen Automotive | Cenntro Electric vs. Canoo Inc | Cenntro Electric vs. Hyzon Motors | Cenntro Electric vs. AYRO Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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