Correlation Between Xpeng and Canoo

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

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

Diversification Opportunities for Xpeng and Canoo

-0.2

Correlation Coefficient

Xpeng  Canoo

Good diversification

The 3 months correlation between Xpeng and Canoo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc and Xpeng 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 Xpeng Inc are associated (or correlated) with Canoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Inc has no effect on the direction of Xpeng i.e., Xpeng and Canoo go up and down completely randomly.

Pair Corralation between Xpeng and Canoo

Given the investment horizon of 90 days Xpeng Inc is expected to generate 0.69 times more return on investment than Canoo. However, Xpeng Inc is 1.44 times less risky than Canoo. It trades about -0.01 of its potential returns per unit of risk. Canoo Inc is currently generating about -0.04 per unit of risk. If you would invest  1,982  in Xpeng Inc on January 31, 2024 and sell it today you would lose (1,172) from holding Xpeng Inc or give up 59.13% of portfolio value over 90 days.

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

Xpeng Inc  vs.  Canoo Inc

Xpeng Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xpeng Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Xpeng is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canoo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Canoo is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xpeng and Canoo

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

The idea behind Xpeng Inc and Canoo Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.