Correlation Between Li Auto and Vicinity
Can any of the company-specific risk be diversified away by investing in both Li Auto and Vicinity 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 Vicinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Vicinity Motor Corp, you can compare the effects of market volatilities on Li Auto and Vicinity 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 Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Vicinity.
Diversification Opportunities for Li Auto and Vicinity
Good diversification
The 3 months correlation between Li Auto and Vicinity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp 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 Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of Li Auto i.e., Li Auto and Vicinity go up and down completely randomly.
Pair Corralation between Li Auto and Vicinity
Allowing for the 90-day total investment horizon Li Auto is expected to generate 0.14 times more return on investment than Vicinity. However, Li Auto is 6.97 times less risky than Vicinity. It trades about -0.28 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.27 per unit of risk. If you would invest 2,913 in Li Auto on August 28, 2024 and sell it today you would lose (669.00) from holding Li Auto or give up 22.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Vicinity Motor Corp
Performance |
| Timeline |
| Li Auto |
| Vicinity Motor Corp |
Li Auto and Vicinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Vicinity
The main advantage of trading using opposite Li Auto and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Vicinity 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 Vicinity will offset losses from the drop in Vicinity's long position.The idea behind Li Auto and Vicinity Motor Corp 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.| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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