Correlation Between Stoneridge and Li Auto
Can any of the company-specific risk be diversified away by investing in both Stoneridge and Li Auto 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 Stoneridge and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoneridge and Li Auto, you can compare the effects of market volatilities on Stoneridge and Li Auto 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 Stoneridge with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoneridge and Li Auto.
Diversification Opportunities for Stoneridge and Li Auto
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stoneridge and Li Auto is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Stoneridge 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 Stoneridge are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Stoneridge i.e., Stoneridge and Li Auto go up and down completely randomly.
Pair Corralation between Stoneridge and Li Auto
Considering the 90-day investment horizon Stoneridge is expected to under-perform the Li Auto. In addition to that, Stoneridge is 1.46 times more volatile than Li Auto. It trades about -0.19 of its total potential returns per unit of risk. Li Auto is currently generating about -0.18 per unit of volatility. If you would invest 2,842 in Li Auto on August 30, 2024 and sell it today you would lose (511.00) from holding Li Auto or give up 17.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoneridge vs. Li Auto
Performance |
| Timeline |
| Stoneridge |
| Li Auto |
Stoneridge and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoneridge and Li Auto
The main advantage of trading using opposite Stoneridge and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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