Correlation Between Li Ning and ImagineAR
Can any of the company-specific risk be diversified away by investing in both Li Ning and ImagineAR 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 Li Ning and ImagineAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Ning Company and ImagineAR, you can compare the effects of market volatilities on Li Ning and ImagineAR 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 Li Ning with a short position of ImagineAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and ImagineAR.
Diversification Opportunities for Li Ning and ImagineAR
Very good diversification
The 3 months correlation between LNLB and ImagineAR is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR and Li Ning 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 Li Ning Company are associated (or correlated) with ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Li Ning i.e., Li Ning and ImagineAR go up and down completely randomly.
Pair Corralation between Li Ning and ImagineAR
Assuming the 90 days trading horizon Li Ning Company is expected to under-perform the ImagineAR. But the stock apears to be less risky and, when comparing its historical volatility, Li Ning Company is 5.02 times less risky than ImagineAR. The stock trades about -0.23 of its potential returns per unit of risk. The ImagineAR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4.50 in ImagineAR on October 10, 2024 and sell it today you would earn a total of 0.35 from holding ImagineAR or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Ning Company vs. ImagineAR
Performance |
| Timeline |
| Li Ning Company |
| ImagineAR |
Li Ning and ImagineAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and ImagineAR
The main advantage of trading using opposite Li Ning and ImagineAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, ImagineAR 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 ImagineAR will offset losses from the drop in ImagineAR's long position.| Li Ning vs. New Residential Investment | Li Ning vs. CNVISION MEDIA | Li Ning vs. Virtus Investment Partners | Li Ning vs. Tencent Music Entertainment |
| ImagineAR vs. Mitsui Chemicals | ImagineAR vs. ONWARD MEDICAL BV | ImagineAR vs. Siamgas And Petrochemicals | ImagineAR vs. Marie Brizard Wine |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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