Correlation Between Li Auto and 651639AZ9

Can any of the company-specific risk be diversified away by investing in both Li Auto and 651639AZ9 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 651639AZ9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Li Auto and NEM 26 15 JUL 32, you can compare the effects of market volatilities on Li Auto and 651639AZ9 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 651639AZ9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and 651639AZ9.

Diversification Opportunities for Li Auto and 651639AZ9

0.22

Correlation Coefficient

Li Auto  651639AZ9

Modest diversification

The 3 months correlation between Li Auto and 651639AZ9 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and NEM 26 15 JUL 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM 26 15 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 651639AZ9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM 26 15 has no effect on the direction of Li Auto i.e., Li Auto and 651639AZ9 go up and down completely randomly.

Pair Corralation between Li Auto and 651639AZ9

Allowing for the 90-day total investment horizon Li Auto is expected to under-perform the 651639AZ9. In addition to that, Li Auto is 3.51 times more volatile than NEM 26 15 JUL 32. It trades about -0.05 of its total potential returns per unit of risk. NEM 26 15 JUL 32 is currently generating about -0.17 per unit of volatility. If you would invest  8,746  in NEM 26 15 JUL 32 on October 9, 2024 and sell it today you would lose (856.00) from holding NEM 26 15 JUL 32 or give up 9.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Li Auto  vs.  NEM 26 15 JUL 32

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 unfluctuating 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.

NEM 26 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEM 26 15 JUL 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 NEM 26 15 JUL 32 investors.

Pair Trading with Li Auto and 651639AZ9

The main advantage of trading using opposite Li Auto and 651639AZ9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, 651639AZ9 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 651639AZ9 will offset losses from the drop in 651639AZ9's long position.

The idea behind Li Auto and NEM 26 15 JUL 32 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.