Correlation Between Li Ning and BANDAI NAMCO
Can any of the company-specific risk be diversified away by investing in both Li Ning and BANDAI NAMCO 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 BANDAI NAMCO 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 BANDAI NAMCO Holdings, you can compare the effects of market volatilities on Li Ning and BANDAI NAMCO 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 BANDAI NAMCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and BANDAI NAMCO.
Diversification Opportunities for Li Ning and BANDAI NAMCO
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LNNGF and BANDAI is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings 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 BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of Li Ning i.e., Li Ning and BANDAI NAMCO go up and down completely randomly.
Pair Corralation between Li Ning and BANDAI NAMCO
Assuming the 90 days horizon Li Ning Company is expected to under-perform the BANDAI NAMCO. In addition to that, Li Ning is 2.53 times more volatile than BANDAI NAMCO Holdings. It trades about -0.02 of its total potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about 0.03 per unit of volatility. If you would invest 1,025 in BANDAI NAMCO Holdings on September 19, 2024 and sell it today you would earn a total of 160.00 from holding BANDAI NAMCO Holdings or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.1% |
| Values | Daily Returns |
Li Ning Company vs. BANDAI NAMCO Holdings
Performance |
| Timeline |
| Li Ning Company |
| BANDAI NAMCO Holdings |
Li Ning and BANDAI NAMCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and BANDAI NAMCO
The main advantage of trading using opposite Li Ning and BANDAI NAMCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, BANDAI NAMCO 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 BANDAI NAMCO will offset losses from the drop in BANDAI NAMCO's long position.| Li Ning vs. Oriental Land Co | Li Ning vs. ANTA Sports Products | Li Ning vs. Carnival Plc ADS | Li Ning vs. Li Ning Co |
| BANDAI NAMCO vs. Oriental Land Co | BANDAI NAMCO vs. ANTA Sports Products | BANDAI NAMCO vs. Carnival Plc ADS | BANDAI NAMCO vs. Li Ning Company |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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