Correlation Between Li Auto and Movado

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

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

Diversification Opportunities for Li Auto and Movado

-0.38

Correlation Coefficient

Li Auto  Movado

Very good diversification

The 3 months correlation between Li Auto and Movado is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Movado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movado 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 Movado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movado Group has no effect on the direction of Li Auto i.e., Li Auto and Movado go up and down completely randomly.

Pair Corralation between Li Auto and Movado

Allowing for the 90-day total investment horizon Li Auto is expected to generate 1.66 times more return on investment than Movado. However, Li Auto is 1.66 times more volatile than Movado Group. It trades about 0.1 of its potential returns per unit of risk. Movado Group is currently generating about -0.05 per unit of risk. If you would invest  1,900  in Li Auto on September 1, 2024 and sell it today you would earn a total of  468.00  from holding Li Auto or generate 24.63% return on investment over 90 days.

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

Li Auto  vs.  Movado Group

Li Auto

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Li Auto demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Movado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Li Auto and Movado

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

The idea behind Li Auto and Movado Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.