Trading XPEV amid FUD/uncertainty with hedge against its peers.
Currently there is a lot of FUD about delisting for all Chinese listed stock. While I like the long-term growth potential of XPEV, I'd also like to hedge against recent market volatility. One strategy is to long XPEV while short one of its Chinese EV peers. I choose NIO in the chart based on its worse performance on price action and various other factors but you can also consider LI, depending on your view on either company.
Reasoning: Any potential sellout in one Chinese EV due to FUD will most likely affect them all, but looking at price XPEV has out-performed among its 2 other peers:
YTD (45% vs Nio):
6m (>40% vs Nio):
3m (30% vs Nio):
even 5 days chart it has recovered faster by 10% after recent sellout.
Furthermore 2 other analysis
1) Position cost distribution from last session (available on other trading platform)
- Nio Avg cost is $39.17 and closing is $32.15 (this means ~90% distribution cost is above current close)!
- Xpev Avg cost is $44.41 and closing is $43.8 so there is much more room for upside potential.
2) Estimated share price held by institution (e.g. available Info from fintel.io with paid subscription) shows that price paid by NIO is much lower; therefore institutions have a much lower price point for profit!
- Nio lowest est. price point is given as <$10 for over 100 millions of share held by various institutions!
- Xpev lowest est price point is given as at least $19.55 (even for Alibaba), hence institutions paid relatively much more and almost retail-ish price.
Anyway with this info, you can trade XPEV against NIO and adjust your overall strategy as long/neutral/short based on your ratio of XPEV long/NIO short.
Reasoning: Any potential sellout in one Chinese EV due to FUD will most likely affect them all, but looking at price XPEV has out-performed among its 2 other peers:
YTD (45% vs Nio):
6m (>40% vs Nio):
3m (30% vs Nio):
even 5 days chart it has recovered faster by 10% after recent sellout.
Furthermore 2 other analysis
1) Position cost distribution from last session (available on other trading platform)
- Nio Avg cost is $39.17 and closing is $32.15 (this means ~90% distribution cost is above current close)!
- Xpev Avg cost is $44.41 and closing is $43.8 so there is much more room for upside potential.
2) Estimated share price held by institution (e.g. available Info from fintel.io with paid subscription) shows that price paid by NIO is much lower; therefore institutions have a much lower price point for profit!
- Nio lowest est. price point is given as <$10 for over 100 millions of share held by various institutions!
- Xpev lowest est price point is given as at least $19.55 (even for Alibaba), hence institutions paid relatively much more and almost retail-ish price.
Anyway with this info, you can trade XPEV against NIO and adjust your overall strategy as long/neutral/short based on your ratio of XPEV long/NIO short.
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