Correlation Between Li Auto and TriSalus Life

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

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

Diversification Opportunities for Li Auto and TriSalus Life

0.14

Correlation Coefficient

Li Auto  TriSalus Life

Average diversification

The 3 months correlation between Li Auto and TriSalus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and TriSalus Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriSalus Life Sciences 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 TriSalus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriSalus Life Sciences has no effect on the direction of Li Auto i.e., Li Auto and TriSalus Life go up and down completely randomly.

Pair Corralation between Li Auto and TriSalus Life

Allowing for the 90-day total investment horizon Li Auto is expected to generate 7.1 times less return on investment than TriSalus Life. But when comparing it to its historical volatility, Li Auto is 2.83 times less risky than TriSalus Life. It trades about 0.04 of its potential returns per unit of risk. TriSalus Life Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  93.00  in TriSalus Life Sciences on October 11, 2024 and sell it today you would earn a total of  9.00  from holding TriSalus Life Sciences or generate 9.68% return on investment over 90 days.

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

Li Auto  vs.  TriSalus Life Sciences

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 latest abnormal performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

TriSalus Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TriSalus Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, TriSalus Life is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Li Auto and TriSalus Life

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

The idea behind Li Auto and TriSalus Life Sciences 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.