Correlation Between Li Auto and Cenntro Electric
Can any of the company-specific risk be diversified away by investing in both Li Auto and Cenntro Electric 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 Cenntro Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Cenntro Electric Group, you can compare the effects of market volatilities on Li Auto and Cenntro Electric 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 Cenntro Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Cenntro Electric.
Diversification Opportunities for Li Auto and Cenntro Electric
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Li Auto and Cenntro is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Cenntro Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenntro Electric 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 Cenntro Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenntro Electric has no effect on the direction of Li Auto i.e., Li Auto and Cenntro Electric go up and down completely randomly.
Pair Corralation between Li Auto and Cenntro Electric
Allowing for the 90-day total investment horizon Li Auto is expected to generate 0.66 times more return on investment than Cenntro Electric. However, Li Auto is 1.53 times less risky than Cenntro Electric. It trades about 0.03 of its potential returns per unit of risk. Cenntro Electric Group is currently generating about 0.01 per unit of risk. If you would invest 2,949 in Li Auto on March 11, 2025 and sell it today you would earn a total of 66.00 from holding Li Auto or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Cenntro Electric Group
Performance |
| Timeline |
| Li Auto |
| Cenntro Electric |
Li Auto and Cenntro Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Cenntro Electric
The main advantage of trading using opposite Li Auto and Cenntro Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Cenntro Electric 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 Cenntro Electric will offset losses from the drop in Cenntro Electric's long position.The idea behind Li Auto and Cenntro Electric Group 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.| Cenntro Electric vs. Mullen Automotive | Cenntro Electric vs. AYRO Inc | Cenntro Electric vs. Workhorse Group | Cenntro Electric vs. GreenPower Motor |
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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