Correlation Between Ehang Holdings and A2Z Smart

Can any of the company-specific risk be diversified away by investing in both Ehang Holdings and A2Z Smart 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 A2Z Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ehang Holdings and A2Z Smart Technologies, you can compare the effects of market volatilities on Ehang Holdings and A2Z Smart 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 A2Z Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ehang Holdings and A2Z Smart.

Diversification Opportunities for Ehang Holdings and A2Z Smart

-0.93

Correlation Coefficient

Ehang Holdings  A2Z Smart

Pay attention - limited upside

The 3 months correlation between Ehang and A2Z is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ehang Holdings and A2Z Smart Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2Z Smart Technologies 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 A2Z Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2Z Smart Technologies has no effect on the direction of Ehang Holdings i.e., Ehang Holdings and A2Z Smart go up and down completely randomly.

Pair Corralation between Ehang Holdings and A2Z Smart

Allowing for the 90-day total investment horizon Ehang Holdings is expected to generate 0.69 times more return on investment than A2Z Smart. However, Ehang Holdings is 1.45 times less risky than A2Z Smart. It trades about -0.08 of its potential returns per unit of risk. A2Z Smart Technologies is currently generating about -0.1 per unit of risk. If you would invest  2,040  in Ehang Holdings on January 30, 2024 and sell it today you would lose (216.00) from holding Ehang Holdings or give up 10.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ehang Holdings  vs.  A2Z Smart Technologies

Ehang Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ehang Holdings are ranked lower than 13 (%) 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.

A2Z Smart Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A2Z Smart Technologies 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 fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ehang Holdings and A2Z Smart

The main advantage of trading using opposite Ehang Holdings and A2Z Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ehang Holdings position performs unexpectedly, A2Z Smart 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 A2Z Smart will offset losses from the drop in A2Z Smart's long position.

The idea behind Ehang Holdings and A2Z Smart Technologies 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.