Correlation Between Polestar Automotive and Electrameccanica
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Electrameccanica 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 Polestar Automotive and Electrameccanica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polestar Automotive Holding and Electrameccanica Vehicles Corp, you can compare the effects of market volatilities on Polestar Automotive and Electrameccanica 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 Polestar Automotive with a short position of Electrameccanica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Electrameccanica.
Diversification Opportunities for Polestar Automotive and Electrameccanica
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polestar and Electrameccanica is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Electrameccanica Vehicles Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrameccanica Veh and Polestar Automotive 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 Polestar Automotive Holding are associated (or correlated) with Electrameccanica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrameccanica Veh has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Electrameccanica go up and down completely randomly.
Pair Corralation between Polestar Automotive and Electrameccanica
Given the investment horizon of 90 days Polestar Automotive Holding is expected to under-perform the Electrameccanica. But the stock apears to be less risky and, when comparing its historical volatility, Polestar Automotive Holding is 1.3 times less risky than Electrameccanica. The stock trades about -0.04 of its potential returns per unit of risk. The Electrameccanica Vehicles Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 71.00 in Electrameccanica Vehicles Corp on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Electrameccanica Vehicles Corp or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.45% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Electrameccanica Vehicles Corp
Performance |
| Timeline |
| Polestar Automotive |
| Electrameccanica Veh |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Polestar Automotive and Electrameccanica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Electrameccanica
The main advantage of trading using opposite Polestar Automotive and Electrameccanica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Electrameccanica 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 Electrameccanica will offset losses from the drop in Electrameccanica's long position.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Nio Class A |
| Electrameccanica vs. GreenPower Motor | Electrameccanica vs. Workhorse Group | Electrameccanica vs. Cenntro Electric Group | Electrameccanica vs. Volcon 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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