Correlation Between Li Ning and Madison Square
Can any of the company-specific risk be diversified away by investing in both Li Ning and Madison Square 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 Madison Square 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 Madison Square Garden, you can compare the effects of market volatilities on Li Ning and Madison Square 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 Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and Madison Square.
Diversification Opportunities for Li Ning and Madison Square
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LNLB and Madison is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden 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 Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Li Ning i.e., Li Ning and Madison Square go up and down completely randomly.
Pair Corralation between Li Ning and Madison Square
Assuming the 90 days trading horizon Li Ning Company is expected to generate 3.58 times more return on investment than Madison Square. However, Li Ning is 3.58 times more volatile than Madison Square Garden. It trades about 0.09 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.19 per unit of risk. If you would invest 158.00 in Li Ning Company on September 2, 2024 and sell it today you would earn a total of 34.00 from holding Li Ning Company or generate 21.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Ning Company vs. Madison Square Garden
Performance |
| Timeline |
| Li Ning Company |
| Madison Square Garden |
Li Ning and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and Madison Square
The main advantage of trading using opposite Li Ning and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, Madison Square 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 Madison Square will offset losses from the drop in Madison Square's long position.| Li Ning vs. Global Ship Lease | Li Ning vs. Perseus Mining Limited | Li Ning vs. Playtech plc | Li Ning vs. Uber Technologies |
| Madison Square vs. Li Ning Company | Madison Square vs. Trip Group Limited | Madison Square vs. Superior Plus Corp | Madison Square vs. NMI Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |