Correlation Between Li Auto and 655844CP1

Can any of the company-specific risk be diversified away by investing in both Li Auto and 655844CP1 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 655844CP1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Li Auto and NSC 455 01 JUN 53, you can compare the effects of market volatilities on Li Auto and 655844CP1 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 655844CP1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and 655844CP1.

Diversification Opportunities for Li Auto and 655844CP1

-0.04

Correlation Coefficient

Li Auto  655844CP1

Good diversification

The 3 months correlation between Li Auto and 655844CP1 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and NSC 455 01 JUN 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSC 455 01 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 655844CP1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSC 455 01 has no effect on the direction of Li Auto i.e., Li Auto and 655844CP1 go up and down completely randomly.

Pair Corralation between Li Auto and 655844CP1

Allowing for the 90-day total investment horizon Li Auto is expected to under-perform the 655844CP1. In addition to that, Li Auto is 1.15 times more volatile than NSC 455 01 JUN 53. It trades about -0.1 of its total potential returns per unit of risk. NSC 455 01 JUN 53 is currently generating about 0.01 per unit of volatility. If you would invest  8,633  in NSC 455 01 JUN 53 on October 27, 2024 and sell it today you would lose (130.00) from holding NSC 455 01 JUN 53 or give up 1.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Li Auto  vs.  NSC 455 01 JUN 53

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 unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NSC 455 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSC 455 01 JUN 53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 655844CP1 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 655844CP1

The main advantage of trading using opposite Li Auto and 655844CP1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, 655844CP1 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 655844CP1 will offset losses from the drop in 655844CP1's long position.

The idea behind Li Auto and NSC 455 01 JUN 53 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.