Correlation Between Li Auto and 191219AY0

Can any of the company-specific risk be diversified away by investing in both Li Auto and 191219AY0 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 191219AY0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Li Auto and COCA A ENTERPRISES, you can compare the effects of market volatilities on Li Auto and 191219AY0 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 191219AY0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and 191219AY0.

Diversification Opportunities for Li Auto and 191219AY0

0.56

Correlation Coefficient

Li Auto  191219AY0

Very weak diversification

The 3 months correlation between Li Auto and 191219AY0 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and COCA A ENTERPRISES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A ENTERPRISES 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 191219AY0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A ENTERPRISES has no effect on the direction of Li Auto i.e., Li Auto and 191219AY0 go up and down completely randomly.

Pair Corralation between Li Auto and 191219AY0

Allowing for the 90-day total investment horizon Li Auto is expected to generate 4.77 times more return on investment than 191219AY0. However, Li Auto is 4.77 times more volatile than COCA A ENTERPRISES. It trades about 0.19 of its potential returns per unit of risk. COCA A ENTERPRISES is currently generating about 0.21 per unit of risk. If you would invest  2,183  in Li Auto on September 27, 2024 and sell it today you would earn a total of  261.00  from holding Li Auto or generate 11.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Li Auto  vs.  COCA A ENTERPRISES

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 fairly strong forward indicators, Li Auto is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

COCA A ENTERPRISES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COCA A ENTERPRISES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 191219AY0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Li Auto and 191219AY0

The main advantage of trading using opposite Li Auto and 191219AY0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, 191219AY0 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 191219AY0 will offset losses from the drop in 191219AY0's long position.

The idea behind Li Auto and COCA A ENTERPRISES 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .