Correlation Between Huntington Ingalls and Ehang Holdings

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Can any of the company-specific risk be diversified away by investing in both Huntington Ingalls 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 Huntington Ingalls and Ehang Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Ingalls Industries and Ehang Holdings, you can compare the effects of market volatilities on Huntington Ingalls 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 Huntington Ingalls with a short position of Ehang Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Ingalls and Ehang Holdings.

Diversification Opportunities for Huntington Ingalls and Ehang Holdings

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Huntington and Ehang is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Ehang Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ehang Holdings and Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and Ehang Holdings go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Ehang Holdings

Considering the 90-day investment horizon Huntington Ingalls is expected to generate 2.33 times less return on investment than Ehang Holdings. But when comparing it to its historical volatility, Huntington Ingalls Industries is 4.07 times less risky than Ehang Holdings. It trades about 0.12 of its potential returns per unit of risk. Ehang Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,111  in Ehang Holdings on December 29, 2023 and sell it today you would earn a total of  768.00  from holding Ehang Holdings or generate 69.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Huntington Ingalls Industries  vs.  Ehang Holdings

 Performance 
       Timeline  
Huntington Ingalls 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Huntington Ingalls may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Ehang Holdings 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ehang Holdings are ranked lower than 4 (%) 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.

Huntington Ingalls and Ehang Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huntington Ingalls and Ehang Holdings

The main advantage of trading using opposite Huntington Ingalls and Ehang Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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 Huntington Ingalls Industries 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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