Correlation Between GM and ECARX Holdings
Can any of the company-specific risk be diversified away by investing in both GM and ECARX Holdings 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 GM and ECARX Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ECARX Holdings Class, you can compare the effects of market volatilities on GM and ECARX Holdings 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 GM with a short position of ECARX Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ECARX Holdings.
Diversification Opportunities for GM and ECARX Holdings
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and ECARX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ECARX Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Class and GM 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 General Motors are associated (or correlated) with ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Class has no effect on the direction of GM i.e., GM and ECARX Holdings go up and down completely randomly.
Pair Corralation between GM and ECARX Holdings
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the ECARX Holdings. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.99 times less risky than ECARX Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The ECARX Holdings Class is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 174.00 in ECARX Holdings Class on September 15, 2024 and sell it today you would earn a total of 24.00 from holding ECARX Holdings Class or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ECARX Holdings Class
Performance |
| Timeline |
| General Motors |
| ECARX Holdings Class |
GM and ECARX Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ECARX Holdings
The main advantage of trading using opposite GM and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ECARX Holdings 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 ECARX Holdings will offset losses from the drop in ECARX Holdings' long position.The idea behind General Motors and ECARX Holdings Class 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.| ECARX Holdings vs. Ford Motor | ECARX Holdings vs. General Motors | ECARX Holdings vs. Goodyear Tire Rubber | ECARX Holdings vs. Li Auto |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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