Correlation Between Li Auto and Worksport
Can any of the company-specific risk be diversified away by investing in both Li Auto and Worksport 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 Worksport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Worksport, you can compare the effects of market volatilities on Li Auto and Worksport 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 Worksport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Worksport.
Diversification Opportunities for Li Auto and Worksport
Modest diversification
The 3 months correlation between Li Auto and Worksport is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Worksport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worksport 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 Worksport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worksport has no effect on the direction of Li Auto i.e., Li Auto and Worksport go up and down completely randomly.
Pair Corralation between Li Auto and Worksport
Allowing for the 90-day total investment horizon Li Auto is expected to generate 0.43 times more return on investment than Worksport. However, Li Auto is 2.31 times less risky than Worksport. It trades about -0.04 of its potential returns per unit of risk. Worksport is currently generating about -0.05 per unit of risk. If you would invest 2,465 in Li Auto on September 3, 2024 and sell it today you would lose (97.00) from holding Li Auto or give up 3.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Worksport
Performance |
| Timeline |
| Li Auto |
| Worksport |
Li Auto and Worksport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Worksport
The main advantage of trading using opposite Li Auto and Worksport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Worksport 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 Worksport will offset losses from the drop in Worksport's long position.| Li Auto vs. GreenPower Motor | Li Auto vs. ZEEKR Intelligent Technology | Li Auto vs. Volcon Inc | Li Auto vs. Ford Motor |
| Worksport vs. Allison Transmission Holdings | Worksport vs. Aptiv PLC | Worksport vs. LKQ Corporation | Worksport vs. Lear Corporation |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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