Correlation Between Li Auto and Tapestry
Can any of the company-specific risk be diversified away by investing in both Li Auto and Tapestry 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 Tapestry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and Tapestry, you can compare the effects of market volatilities on Li Auto and Tapestry 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 Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and Tapestry.
Diversification Opportunities for Li Auto and Tapestry
Very good diversification
The 3 months correlation between Li Auto and Tapestry is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Li Auto i.e., Li Auto and Tapestry go up and down completely randomly.
Pair Corralation between Li Auto and Tapestry
Allowing for the 90-day total investment horizon Li Auto is expected to under-perform the Tapestry. But the stock apears to be less risky and, when comparing its historical volatility, Li Auto is 1.0 times less risky than Tapestry. The stock trades about -0.12 of its potential returns per unit of risk. The Tapestry is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,896 in Tapestry on June 7, 2025 and sell it today you would earn a total of 2,522 from holding Tapestry or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. Tapestry
Performance |
| Timeline |
| Li Auto |
| Tapestry |
Li Auto and Tapestry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and Tapestry
The main advantage of trading using opposite Li Auto and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry's long position.| Li Auto vs. Xpeng Inc | Li Auto vs. Tesla Inc | Li Auto vs. Rivian Automotive | Li Auto vs. Palantir Technologies Class |
| Tapestry vs. VF Corporation | Tapestry vs. Levi Strauss Co | Tapestry vs. Under Armour A | Tapestry vs. Columbia Sportswear |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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