Correlation Between Li Auto and Hyzon Motors
Can any of the company-specific risk be diversified away by investing in both Li Auto and Hyzon Motors 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 Hyzon Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Hyzon Motors, you can compare the effects of market volatilities on Li Auto and Hyzon Motors 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 Hyzon Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Hyzon Motors.
Diversification Opportunities for Li Auto and Hyzon Motors
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Li Auto and Hyzon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors 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 Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Li Auto i.e., Li Auto and Hyzon Motors go up and down completely randomly.
Pair Corralation between Li Auto and Hyzon Motors
Allowing for the 90-day total investment horizon Li Auto is expected to under-perform the Hyzon Motors. But the stock apears to be less risky and, when comparing its historical volatility, Li Auto is 1.19 times less risky than Hyzon Motors. The stock trades about -0.28 of its potential returns per unit of risk. The Hyzon Motors is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 192.00 in Hyzon Motors on August 28, 2024 and sell it today you would lose (13.00) from holding Hyzon Motors or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Hyzon Motors
Performance |
| Timeline |
| Li Auto |
| Hyzon Motors |
Li Auto and Hyzon Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Hyzon Motors
The main advantage of trading using opposite Li Auto and Hyzon Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Hyzon Motors 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 Hyzon Motors will offset losses from the drop in Hyzon Motors' long position.The idea behind Li Auto and Hyzon Motors 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.| Hyzon Motors vs. Mullen Automotive | Hyzon Motors vs. Canoo Inc | Hyzon Motors vs. Faraday Future Intelligent | Hyzon Motors vs. Polestar Automotive Holding |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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