Correlation Between CarsalesCom and Li Auto
Can any of the company-specific risk be diversified away by investing in both CarsalesCom 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 CarsalesCom and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom Ltd ADR and Li Auto, you can compare the effects of market volatilities on CarsalesCom 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 CarsalesCom with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Li Auto.
Diversification Opportunities for CarsalesCom and Li Auto
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarsalesCom and Li Auto is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and CarsalesCom 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 CarsalesCom Ltd ADR 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 CarsalesCom i.e., CarsalesCom and Li Auto go up and down completely randomly.
Pair Corralation between CarsalesCom and Li Auto
Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 0.79 times more return on investment than Li Auto. However, CarsalesCom Ltd ADR is 1.26 times less risky than Li Auto. It trades about 0.23 of its potential returns per unit of risk. Li Auto is currently generating about 0.08 per unit of risk. If you would invest 4,840 in CarsalesCom Ltd ADR on September 22, 2024 and sell it today you would earn a total of 567.00 from holding CarsalesCom Ltd ADR or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Li Auto
Performance |
| Timeline |
| CarsalesCom ADR |
| Li Auto |
CarsalesCom and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Li Auto
The main advantage of trading using opposite CarsalesCom and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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.| CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Sabio Holdings | CarsalesCom vs. PayPal Holdings | CarsalesCom vs. McDonalds |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |