Correlation Between Daiichi Sankyo and Li Ning
Can any of the company-specific risk be diversified away by investing in both Daiichi Sankyo and Li Ning 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 Daiichi Sankyo and Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiichi Sankyo and Li Ning Company, you can compare the effects of market volatilities on Daiichi Sankyo and Li Ning 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 Daiichi Sankyo with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiichi Sankyo and Li Ning.
Diversification Opportunities for Daiichi Sankyo and Li Ning
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daiichi and LNNGF is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Daiichi Sankyo and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company and Daiichi Sankyo 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 Daiichi Sankyo are associated (or correlated) with Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of Daiichi Sankyo i.e., Daiichi Sankyo and Li Ning go up and down completely randomly.
Pair Corralation between Daiichi Sankyo and Li Ning
Assuming the 90 days horizon Daiichi Sankyo is expected to generate 1.2 times more return on investment than Li Ning. However, Daiichi Sankyo is 1.2 times more volatile than Li Ning Company. It trades about 0.01 of its potential returns per unit of risk. Li Ning Company is currently generating about -0.02 per unit of risk. If you would invest 3,415 in Daiichi Sankyo on August 24, 2024 and sell it today you would lose (396.00) from holding Daiichi Sankyo or give up 11.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.0% |
| Values | Daily Returns |
Daiichi Sankyo vs. Li Ning Company
Performance |
| Timeline |
| Daiichi Sankyo |
| Li Ning Company |
Daiichi Sankyo and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiichi Sankyo and Li Ning
The main advantage of trading using opposite Daiichi Sankyo and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiichi Sankyo position performs unexpectedly, Li Ning 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 Ning will offset losses from the drop in Li Ning's long position.| Daiichi Sankyo vs. Ono Pharmaceutical Co | Daiichi Sankyo vs. GSK plc | Daiichi Sankyo vs. Grifols SA ADR | Daiichi Sankyo vs. Pfizer Inc |
| Li Ning vs. YETI Holdings | Li Ning vs. Callaway Golf | Li Ning vs. Acushnet Holdings Corp | Li Ning vs. Planet Fitness |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |