Correlation Between Kandi Technologies and Li Auto
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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kandi Technologies Group vs. Li Auto
Performance |
| Timeline |
| Kandi Technologies |
| Li Auto |
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.| Kandi Technologies vs. Hyliion Holdings Corp | Kandi Technologies vs. Foresight Autonomous Holdings | Kandi Technologies vs. Aeva Technologies | Kandi Technologies vs. Aeye Inc |
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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