Correlation Between DAX Index and Li Ning
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By analyzing existing cross correlation between DAX Index and Li Ning Company, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Li Ning.
Diversification Opportunities for DAX Index and Li Ning
Average diversification
The 3 months correlation between DAX and LNLB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Li Ning go up and down completely randomly.
Pair Corralation between DAX Index and Li Ning
Assuming the 90 days trading horizon DAX Index is expected to generate 0.4 times more return on investment than Li Ning. However, DAX Index is 2.49 times less risky than Li Ning. It trades about 0.31 of its potential returns per unit of risk. Li Ning Company is currently generating about 0.11 per unit of risk. If you would invest 2,143,058 in DAX Index on November 29, 2024 and sell it today you would earn a total of 136,353 from holding DAX Index or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Li Ning Company
Performance |
| Timeline |
DAX Index and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Li Ning Company
Pair trading matchups for Li Ning
Pair Trading with DAX Index and Li Ning
The main advantage of trading using opposite DAX Index and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. BOSTON BEER A | DAX Index vs. JSC Halyk bank | DAX Index vs. Fevertree Drinks PLC | DAX Index vs. Tsingtao Brewery |
| Li Ning vs. BOSTON BEER A | Li Ning vs. China Resources Beer | Li Ning vs. GRIFFIN MINING LTD | Li Ning vs. SAN MIGUEL BREWERY |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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