Correlation Between Li Auto and JPMORGAN

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

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

Diversification Opportunities for Li Auto and JPMORGAN

-0.03

Correlation Coefficient

Li Auto  JPMORGAN

Good diversification

The 3 months correlation between Li Auto and JPMORGAN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and JPMORGAN CHASE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMORGAN CHASE CO 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 JPMORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMORGAN CHASE CO has no effect on the direction of Li Auto i.e., Li Auto and JPMORGAN go up and down completely randomly.

Pair Corralation between Li Auto and JPMORGAN

Allowing for the 90-day total investment horizon Li Auto is expected to generate 12.1 times more return on investment than JPMORGAN. However, Li Auto is 12.1 times more volatile than JPMORGAN CHASE CO. It trades about 0.08 of its potential returns per unit of risk. JPMORGAN CHASE CO is currently generating about -0.05 per unit of risk. If you would invest  1,905  in Li Auto on September 14, 2024 and sell it today you would earn a total of  374.00  from holding Li Auto or generate 19.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Li Auto  vs.  JPMORGAN CHASE CO

Li Auto

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 6 (%) 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.

JPMORGAN CHASE CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMORGAN CHASE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMORGAN 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 JPMORGAN

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

The idea behind Li Auto and JPMORGAN CHASE CO 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.