Correlation Between Li Auto and Marine Products
Can any of the company-specific risk be diversified away by investing in both Li Auto and Marine 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 Marine 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 Marine Products, you can compare the effects of market volatilities on Li Auto and Marine 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Marine Products.
Diversification Opportunities for Li Auto and Marine Products
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Li Auto and Marine is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Li Auto i.e., Li Auto and Marine Products go up and down completely randomly.
Pair Corralation between Li Auto and Marine Products
Allowing for the 90-day total investment horizon Li Auto is expected to under-perform the Marine Products. In addition to that, Li Auto is 1.66 times more volatile than Marine Products. It trades about -0.02 of its total potential returns per unit of risk. Marine Products is currently generating about 0.02 per unit of volatility. If you would invest 935.00 in Marine Products on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Marine Products or generate 5.78% 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. Marine Products
Performance |
| Timeline |
| Li Auto |
| Marine Products |
Li Auto and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Marine Products
The main advantage of trading using opposite Li Auto and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Marine 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 Marine Products will offset losses from the drop in Marine Products' long position.The idea behind Li Auto and Marine Products 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.| Marine Products vs. LCI Industries | Marine Products vs. MCBC Holdings | Marine Products vs. Winnebago Industries | Marine Products vs. Thor Industries |
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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