Correlation Between CPI Aerostructures and Ehang Holdings

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

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

Diversification Opportunities for CPI Aerostructures and Ehang Holdings

-0.39

Correlation Coefficient

CPI Aerostructures  Ehang Holdings

Very good diversification

The 3 months correlation between CPI and Ehang is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Ehang Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ehang Holdings and CPI Aerostructures 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 CPI Aerostructures are associated (or correlated) with Ehang Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ehang Holdings has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Ehang Holdings go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Ehang Holdings

Considering the 90-day investment horizon CPI Aerostructures is expected to under-perform the Ehang Holdings. In addition to that, CPI Aerostructures is 2.58 times more volatile than Ehang Holdings. It trades about -0.16 of its total potential returns per unit of risk. Ehang Holdings is currently generating about -0.06 per unit of volatility. If you would invest  1,860  in Ehang Holdings on February 4, 2024 and sell it today you would lose (122.00) from holding Ehang Holdings or give up 6.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CPI Aerostructures  vs.  Ehang Holdings

CPI Aerostructures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPI Aerostructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ehang Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ehang Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Ehang Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPI Aerostructures and Ehang Holdings

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

The idea behind CPI Aerostructures and Ehang 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.