Correlation Between Rivian Automotive and Hesai Group

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

By analyzing existing cross correlation between Rivian Automotive and Hesai Group American, you can compare the effects of market volatilities on Rivian Automotive and Hesai Group 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 Rivian Automotive with a short position of Hesai Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Hesai Group.

Diversification Opportunities for Rivian Automotive and Hesai Group

-0.6

Correlation Coefficient

Rivian Automotive  Hesai Group

Excellent diversification

The 3 months correlation between Rivian and Hesai is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Hesai Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hesai Group American and Rivian Automotive 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 Rivian Automotive are associated (or correlated) with Hesai Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hesai Group American has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Hesai Group go up and down completely randomly.

Pair Corralation between Rivian Automotive and Hesai Group

Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the Hesai Group. But the stock apears to be less risky and, when comparing its historical volatility, Rivian Automotive is 2.04 times less risky than Hesai Group. The stock trades about -0.01 of its potential returns per unit of risk. The Hesai Group American is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Hesai Group American on December 28, 2024 and sell it today you would earn a total of  50.00  from holding Hesai Group American or generate 3.4% return on investment over 90 days.

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

Rivian Automotive  vs.  Hesai Group American

Rivian Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rivian Automotive is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Hesai Group American

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rivian Automotive and Hesai Group

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

The idea behind Rivian Automotive and Hesai Group American 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.