Correlation Between Li Auto and Fly E

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

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

Diversification Opportunities for Li Auto and Fly E

0.5

Correlation Coefficient

Li Auto  Fly E

Very weak diversification

The 3 months correlation between Li Auto and Fly is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, and Li Auto 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 Li Auto are associated (or correlated) with Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Li Auto i.e., Li Auto and Fly E go up and down completely randomly.

Pair Corralation between Li Auto and Fly E

Allowing for the 90-day total investment horizon Li Auto is expected to generate 12.69 times less return on investment than Fly E. But when comparing it to its historical volatility, Li Auto is 3.41 times less risky than Fly E. It trades about 0.02 of its potential returns per unit of risk. Fly E Group, Common is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Fly E Group, Common on October 7, 2024 and sell it today you would earn a total of  4.00  from holding Fly E Group, Common or generate 6.15% return on investment over 90 days.

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

Li Auto  vs.  Fly E Group, Common

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.

Fly E Group,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fly E Group, Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fly E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Li Auto and Fly E

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

The idea behind Li Auto and Fly E Group, Common 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.