Correlation Between Porsche Automobile and Xpeng
Can any of the company-specific risk be diversified away by investing in both Porsche Automobile and Xpeng 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 Porsche Automobile and Xpeng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobile Holding and Xpeng Inc, you can compare the effects of market volatilities on Porsche Automobile and Xpeng 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 Porsche Automobile with a short position of Xpeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobile and Xpeng.
Diversification Opportunities for Porsche Automobile and Xpeng
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Porsche and Xpeng is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and Xpeng Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xpeng Inc and Porsche Automobile 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 Porsche Automobile Holding are associated (or correlated) with Xpeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xpeng Inc has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and Xpeng go up and down completely randomly.
Pair Corralation between Porsche Automobile and Xpeng
Assuming the 90 days horizon Porsche Automobile is expected to generate 9.78 times less return on investment than Xpeng. But when comparing it to its historical volatility, Porsche Automobile Holding is 2.6 times less risky than Xpeng. It trades about 0.13 of its potential returns per unit of risk. Xpeng Inc is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 1,214 in Xpeng Inc on November 9, 2024 and sell it today you would earn a total of 496.00 from holding Xpeng Inc or generate 40.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porsche Automobile Holding vs. Xpeng Inc
Performance |
| Timeline |
| Porsche Automobile |
| Xpeng Inc |
Porsche Automobile and Xpeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobile and Xpeng
The main advantage of trading using opposite Porsche Automobile and Xpeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobile position performs unexpectedly, Xpeng 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 Xpeng will offset losses from the drop in Xpeng's long position.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG | Porsche Automobile vs. Volkswagen AG Pref |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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