Correlation Between Ehang Holdings and Cadre Holdings

Can any of the company-specific risk be diversified away by investing in both Ehang Holdings and Cadre 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 Ehang Holdings and Cadre Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ehang Holdings and Cadre Holdings, you can compare the effects of market volatilities on Ehang Holdings and Cadre 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 Ehang Holdings with a short position of Cadre Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ehang Holdings and Cadre Holdings.

Diversification Opportunities for Ehang Holdings and Cadre Holdings

0.23

Correlation Coefficient

Ehang Holdings  Cadre Holdings

Modest diversification

The 3 months correlation between Ehang and Cadre is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ehang Holdings and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings 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 Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Ehang Holdings i.e., Ehang Holdings and Cadre Holdings go up and down completely randomly.

Pair Corralation between Ehang Holdings and Cadre Holdings

Allowing for the 90-day total investment horizon Ehang Holdings is expected to generate 1.8 times more return on investment than Cadre Holdings. However, Ehang Holdings is 1.8 times more volatile than Cadre Holdings. It trades about 0.15 of its potential returns per unit of risk. Cadre Holdings is currently generating about -0.08 per unit of risk. If you would invest  1,464  in Ehang Holdings on September 27, 2024 and sell it today you would earn a total of  155.50  from holding Ehang Holdings or generate 10.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ehang Holdings  vs.  Cadre Holdings

Ehang Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ehang Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Ehang Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cadre Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ehang Holdings and Cadre Holdings

The main advantage of trading using opposite Ehang Holdings and Cadre Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ehang Holdings position performs unexpectedly, Cadre 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 Cadre Holdings will offset losses from the drop in Cadre Holdings' long position.

The idea behind Ehang Holdings and Cadre Holdings 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..