Correlation Between Marine Products and Li Auto

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

By analyzing existing cross correlation between Marine Products and Li Auto, you can compare the effects of market volatilities on Marine Products and Li Auto 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 Marine Products with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and Li Auto.

Diversification Opportunities for Marine Products and Li Auto

-0.48

Correlation Coefficient

Marine Products  Li Auto

Very good diversification

The 3 months correlation between Marine and Li Auto is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Marine Products 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 Marine Products are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Marine Products i.e., Marine Products and Li Auto go up and down completely randomly.

Pair Corralation between Marine Products and Li Auto

Considering the 90-day investment horizon Marine Products is expected to generate 0.53 times more return on investment than Li Auto. However, Marine Products is 1.87 times less risky than Li Auto. It trades about -0.02 of its potential returns per unit of risk. Li Auto is currently generating about -0.07 per unit of risk. If you would invest  972.00  in Marine Products on September 18, 2024 and sell it today you would lose (9.00) from holding Marine Products or give up 0.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marine Products  vs.  Li Auto

Marine Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Li Auto

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Li Auto may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marine Products and Li Auto

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

The idea behind Marine Products and Li Auto 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.