Correlation Between VinFast Auto and Li Auto

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

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

Diversification Opportunities for VinFast Auto and Li Auto

-0.69

Correlation Coefficient

VinFast Auto  Li Auto

Excellent diversification

The 3 months correlation between VinFast and Li Auto is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VinFast Auto Ltd and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and VinFast 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 VinFast Auto Ltd 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 VinFast Auto i.e., VinFast Auto and Li Auto go up and down completely randomly.

Pair Corralation between VinFast Auto and Li Auto

Assuming the 90 days horizon VinFast Auto is expected to generate 3.22 times less return on investment than Li Auto. In addition to that, VinFast Auto is 1.11 times more volatile than Li Auto. It trades about 0.01 of its total potential returns per unit of risk. Li Auto is currently generating about 0.05 per unit of volatility. If you would invest  2,113  in Li Auto on August 21, 2024 and sell it today you would earn a total of  185.00  from holding Li Auto or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VinFast Auto Ltd  vs.  Li Auto

VinFast Auto

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VinFast Auto Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VinFast Auto is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Li Auto

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Li Auto are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Li Auto demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VinFast Auto and Li Auto

The main advantage of trading using opposite VinFast Auto and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VinFast Auto 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 VinFast Auto Ltd 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.