Correlation Between Murano Global and Li Auto

Can any of the company-specific risk be diversified away by investing in both Murano Global 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 Murano Global and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Murano Global Investments and Li Auto, you can compare the effects of market volatilities on Murano Global 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 Murano Global with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murano Global and Li Auto.

Diversification Opportunities for Murano Global and Li Auto

0.03

Correlation Coefficient

Murano Global  Li Auto

Significant diversification

The 3 months correlation between Murano and Li Auto is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Murano Global Investments and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Murano Global 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 Murano Global 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 Murano Global i.e., Murano Global and Li Auto go up and down completely randomly.

Pair Corralation between Murano Global and Li Auto

Assuming the 90 days horizon Murano Global Investments is expected to generate 2.14 times more return on investment than Li Auto. However, Murano Global is 2.14 times more volatile than Li Auto. It trades about 0.1 of its potential returns per unit of risk. Li Auto is currently generating about 0.08 per unit of risk. If you would invest  16.00  in Murano Global Investments on September 14, 2024 and sell it today you would earn a total of  5.00  from holding Murano Global Investments or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Murano Global Investments  vs.  Li Auto

Murano Global Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Murano Global Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Murano Global showed solid returns over the last few months and may actually be approaching a breakup point.

Li Auto

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Li Auto demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Murano Global and Li Auto

The main advantage of trading using opposite Murano Global and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murano Global 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.

The idea behind Murano Global Investments and Li Auto 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.

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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.