Correlation Between Li Auto and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Li Auto and Cebu Air 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 Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Cebu Air ADR, you can compare the effects of market volatilities on Li Auto and Cebu Air 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 Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Cebu Air.
Diversification Opportunities for Li Auto and Cebu Air
Poor diversification
The 3 months correlation between Li Auto and Cebu is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Li Auto i.e., Li Auto and Cebu Air go up and down completely randomly.
Pair Corralation between Li Auto and Cebu Air
If you would invest 2,244 in Li Auto on September 25, 2024 and sell it today you would earn a total of 112.00 from holding Li Auto or generate 4.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
Li Auto vs. Cebu Air ADR
Performance |
Timeline |
Li Auto |
Cebu Air ADR |
Li Auto and Cebu Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Li Auto and Cebu Air
The main advantage of trading using opposite Li Auto and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.The idea behind Li Auto and Cebu Air ADR 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.Cebu Air vs. Naked Wines plc | Cebu Air vs. Vodka Brands Corp | Cebu Air vs. Keurig Dr Pepper | Cebu Air vs. National Beverage Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Bonds Directory Find actively traded corporate debentures issued by US companies |