Correlation Between Li Auto and Air Products
Can any of the company-specific risk be diversified away by investing in both Li Auto and Air Products 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 Li Auto and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Air Products and, you can compare the effects of market volatilities on Li Auto and Air Products 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 Li Auto with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Air Products.
Diversification Opportunities for Li Auto and Air Products
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Li Auto and Air is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Li Auto 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 Li Auto are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Li Auto i.e., Li Auto and Air Products go up and down completely randomly.
Pair Corralation between Li Auto and Air Products
Allowing for the 90-day total investment horizon Li Auto is expected to generate 2.96 times more return on investment than Air Products. However, Li Auto is 2.96 times more volatile than Air Products and. It trades about 0.09 of its potential returns per unit of risk. Air Products and is currently generating about 0.13 per unit of risk. If you would invest 1,888 in Li Auto on September 12, 2024 and sell it today you would earn a total of 389.00 from holding Li Auto or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Air Products and
Performance |
| Timeline |
| Li Auto |
| Air Products |
Li Auto and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Air Products
The main advantage of trading using opposite Li Auto and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.The idea behind Li Auto and Air Products and 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.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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