Correlation Between Air Products and Li Auto
Can any of the company-specific risk be diversified away by investing in both Air 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 Air 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 Air Products and and Li Auto, you can compare the effects of market volatilities on Air 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 Air Products with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Li Auto.
Diversification Opportunities for Air Products and Li Auto
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Li Auto is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Air 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 Air Products and 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 Air Products i.e., Air Products and Li Auto go up and down completely randomly.
Pair Corralation between Air Products and Li Auto
Considering the 90-day investment horizon Air Products and is expected to generate 0.41 times more return on investment than Li Auto. However, Air Products and is 2.42 times less risky than Li Auto. It trades about 0.05 of its potential returns per unit of risk. Li Auto is currently generating about -0.02 per unit of risk. If you would invest 26,409 in Air Products and on September 12, 2024 and sell it today you would earn a total of 4,827 from holding Air Products and or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Li Auto
Performance |
| Timeline |
| Air Products |
| Li Auto |
Air Products and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Li Auto
The main advantage of trading using opposite Air Products and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air 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.| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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