Correlation Between Integrated Drilling and Li Auto

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

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

Diversification Opportunities for Integrated Drilling and Li Auto

0.0

Correlation Coefficient

Integrated Drilling  Li Auto

Pay attention - limited upside

The 3 months correlation between Integrated and Li Auto is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Drilling Equipment and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Integrated Drilling 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 Integrated Drilling Equipment 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 Integrated Drilling i.e., Integrated Drilling and Li Auto go up and down completely randomly.

Pair Corralation between Integrated Drilling and Li Auto

If you would invest  2,242  in Li Auto on October 5, 2024 and sell it today you would earn a total of  233.00  from holding Li Auto or generate 10.39% return on investment over 90 days.

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

Integrated Drilling Equipment  vs.  Li Auto

Integrated Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Drilling Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Integrated Drilling is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Li Auto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Auto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Integrated Drilling and Li Auto

The main advantage of trading using opposite Integrated Drilling and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Drilling 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 Integrated Drilling Equipment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.