Correlation Between Li Ning and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Li Ning and Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean Group, you can compare the effects of market volatilities on Li Ning and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and Royal Caribbean.
Diversification Opportunities for Li Ning and Royal Caribbean
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LNLB and Royal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of Li Ning i.e., Li Ning and Royal Caribbean go up and down completely randomly.
Pair Corralation between Li Ning and Royal Caribbean
Assuming the 90 days trading horizon Li Ning is expected to generate 1.81 times less return on investment than Royal Caribbean. In addition to that, Li Ning is 2.1 times more volatile than Royal Caribbean Group. It trades about 0.09 of its total potential returns per unit of risk. Royal Caribbean Group is currently generating about 0.34 per unit of volatility. If you would invest 14,694 in Royal Caribbean Group on September 2, 2024 and sell it today you would earn a total of 8,276 from holding Royal Caribbean Group or generate 56.32% 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. Royal Caribbean Group
Performance |
| Timeline |
| Li Ning Company |
| Royal Caribbean Group |
Li Ning and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and Royal Caribbean
The main advantage of trading using opposite Li Ning and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean'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 |
| Royal Caribbean vs. Microbot Medical | Royal Caribbean vs. CVW CLEANTECH INC | Royal Caribbean vs. CODERE ONLINE LUX | Royal Caribbean vs. AVITA Medical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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