Correlation Between Hyzon Motors and Li Auto

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Can any of the company-specific risk be diversified away by investing in both Hyzon Motors 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 Hyzon Motors and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyzon Motors and Li Auto, you can compare the effects of market volatilities on Hyzon Motors 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 Hyzon Motors with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyzon Motors and Li Auto.

Diversification Opportunities for Hyzon Motors and Li Auto

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Hyzon and Li Auto is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hyzon Motors and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Hyzon Motors 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 Hyzon Motors 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 Hyzon Motors i.e., Hyzon Motors and Li Auto go up and down completely randomly.

Pair Corralation between Hyzon Motors and Li Auto

Given the investment horizon of 90 days Hyzon Motors is expected to under-perform the Li Auto. In addition to that, Hyzon Motors is 1.83 times more volatile than Li Auto. It trades about -0.15 of its total potential returns per unit of risk. Li Auto is currently generating about 0.0 per unit of volatility. If you would invest  3,030  in Li Auto on November 9, 2024 and sell it today you would lose (548.00) from holding Li Auto or give up 18.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hyzon Motors  vs.  Li Auto

 Performance 
       Timeline  
Hyzon Motors 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Li Auto 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Li Auto is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hyzon Motors and Li Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hyzon Motors and Li Auto

The main advantage of trading using opposite Hyzon Motors and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyzon Motors 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 Hyzon Motors 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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