Correlation Between Arrival Vault and Li Auto

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

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

Diversification Opportunities for Arrival Vault and Li Auto

0.0

Correlation Coefficient

Arrival Vault  Li Auto

Pay attention - limited upside

The 3 months correlation between Arrival and Li Auto is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arrival Vault USA and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Arrival Vault 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 Arrival Vault USA are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Arrival Vault i.e., Arrival Vault and Li Auto go up and down completely randomly.

Pair Corralation between Arrival Vault and Li Auto

If you would invest  2,427  in Li Auto on December 29, 2024 and sell it today you would earn a total of  187.00  from holding Li Auto or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arrival Vault USA  vs.  Li Auto

Arrival Vault USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arrival Vault USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Arrival Vault is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Li Auto

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Arrival Vault and Li Auto

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

The idea behind Arrival Vault USA and Li Auto 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.