Correlation Between Li Ning and Nikon Corp
Can any of the company-specific risk be diversified away by investing in both Li Ning and Nikon Corp 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 Nikon Corp 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 Nikon Corp, you can compare the effects of market volatilities on Li Ning and Nikon Corp 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 Nikon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and Nikon Corp.
Diversification Opportunities for Li Ning and Nikon Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LNNGF and Nikon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and Nikon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikon Corp 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 Nikon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikon Corp has no effect on the direction of Li Ning i.e., Li Ning and Nikon Corp go up and down completely randomly.
Pair Corralation between Li Ning and Nikon Corp
Assuming the 90 days horizon Li Ning Company is expected to under-perform the Nikon Corp. In addition to that, Li Ning is 2.13 times more volatile than Nikon Corp. It trades about -0.05 of its total potential returns per unit of risk. Nikon Corp is currently generating about 0.03 per unit of volatility. If you would invest 905.00 in Nikon Corp on August 28, 2024 and sell it today you would earn a total of 276.00 from holding Nikon Corp or generate 30.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.92% |
| Values | Daily Returns |
Li Ning Company vs. Nikon Corp
Performance |
| Timeline |
| Li Ning Company |
| Nikon Corp |
Li Ning and Nikon Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and Nikon Corp
The main advantage of trading using opposite Li Ning and Nikon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, Nikon Corp 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 Nikon Corp will offset losses from the drop in Nikon Corp's long position.| Li Ning vs. YETI Holdings | Li Ning vs. Callaway Golf | Li Ning vs. Acushnet Holdings Corp | Li Ning vs. Planet Fitness |
| Nikon Corp vs. Yamaha Corp DRC | Nikon Corp vs. Planet Fitness | Nikon Corp vs. Plby Group | Nikon Corp vs. Shimano Inc ADR |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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