Correlation Between SM Investments and Li Auto
Can any of the company-specific risk be diversified away by investing in both SM Investments 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 SM Investments and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments and Li Auto, you can compare the effects of market volatilities on SM Investments 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 SM Investments with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Li Auto.
Diversification Opportunities for SM Investments and Li Auto
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SVTMF and Li Auto is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and SM Investments 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 SM Investments 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 SM Investments i.e., SM Investments and Li Auto go up and down completely randomly.
Pair Corralation between SM Investments and Li Auto
Assuming the 90 days horizon SM Investments is expected to under-perform the Li Auto. But the pink sheet apears to be less risky and, when comparing its historical volatility, SM Investments is 1.77 times less risky than Li Auto. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Li Auto is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,411 in Li Auto on October 24, 2024 and sell it today you would lose (152.00) from holding Li Auto or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments vs. Li Auto
Performance |
| Timeline |
| SM Investments |
| Li Auto |
SM Investments and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Li Auto
The main advantage of trading using opposite SM Investments and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments 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.| SM Investments vs. Kohls Corp | SM Investments vs. Nordstrom | SM Investments vs. Macys Inc | SM Investments vs. Dillards |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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