Correlation Between Vicinity and Li Auto
Can any of the company-specific risk be diversified away by investing in both Vicinity 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 Vicinity and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicinity Motor Corp and Li Auto, you can compare the effects of market volatilities on Vicinity 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 Vicinity with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity and Li Auto.
Diversification Opportunities for Vicinity and Li Auto
Good diversification
The 3 months correlation between Vicinity and Li Auto is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Motor Corp and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Vicinity 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 Vicinity Motor Corp 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 Vicinity i.e., Vicinity and Li Auto go up and down completely randomly.
Pair Corralation between Vicinity and Li Auto
Considering the 90-day investment horizon Vicinity Motor Corp is expected to under-perform the Li Auto. In addition to that, Vicinity is 3.07 times more volatile than Li Auto. It trades about -0.05 of its total potential returns per unit of risk. Li Auto is currently generating about 0.02 per unit of volatility. If you would invest 2,204 in Li Auto on August 31, 2024 and sell it today you would earn a total of 127.00 from holding Li Auto or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Vicinity Motor Corp vs. Li Auto
Performance |
| Timeline |
| Vicinity Motor Corp |
| Li Auto |
Vicinity and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity and Li Auto
The main advantage of trading using opposite Vicinity and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity 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.| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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