Correlation Between Li Auto and HEWLETT

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

By analyzing existing cross correlation between Li Auto and HEWLETT PACKARD 6, you can compare the effects of market volatilities on Li Auto and HEWLETT 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 HEWLETT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and HEWLETT.

Diversification Opportunities for Li Auto and HEWLETT

-0.27

Correlation Coefficient

Li Auto  HEWLETT

Very good diversification

The 3 months correlation between Li Auto and HEWLETT is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and HEWLETT PACKARD 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEWLETT PACKARD 6 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 HEWLETT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEWLETT PACKARD 6 has no effect on the direction of Li Auto i.e., Li Auto and HEWLETT go up and down completely randomly.

Pair Corralation between Li Auto and HEWLETT

Allowing for the 90-day total investment horizon Li Auto is expected to generate 4.27 times more return on investment than HEWLETT. However, Li Auto is 4.27 times more volatile than HEWLETT PACKARD 6. It trades about 0.1 of its potential returns per unit of risk. HEWLETT PACKARD 6 is currently generating about -0.11 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	98.41%
Values	Daily Returns

Li Auto  vs.  HEWLETT PACKARD 6

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.

HEWLETT PACKARD 6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEWLETT PACKARD 6 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HEWLETT PACKARD 6 investors.

Pair Trading with Li Auto and HEWLETT

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

The idea behind Li Auto and HEWLETT PACKARD 6 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.