Correlation Between Kandi Technologies and Li Auto

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

Diversification Opportunities for Kandi Technologies and Li Auto

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Kandi and Li Auto is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kandi Technologies Group and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Kandi Technologies 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 Kandi Technologies Group 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 Kandi Technologies i.e., Kandi Technologies and Li Auto go up and down completely randomly.

Pair Corralation between Kandi Technologies and Li Auto

Given the investment horizon of 90 days Kandi Technologies Group is expected to under-perform the Li Auto. In addition to that, Kandi Technologies is 1.33 times more volatile than Li Auto. It trades about -0.3 of its total potential returns per unit of risk. Li Auto is currently generating about 0.03 per unit of volatility. If you would invest  2,261  in Li Auto on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Li Auto or generate 1.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Kandi Technologies Group  vs.  Li Auto

 Performance 
       Timeline  
Kandi Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Li Auto 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Li Auto demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kandi Technologies and Li Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kandi Technologies and Li Auto

The main advantage of trading using opposite Kandi Technologies and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandi Technologies 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 Kandi Technologies Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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