Correlation Between Li Ning and Li Ning
Can any of the company-specific risk be diversified away by investing in both Li Ning and Li Ning 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 Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Ning Co and Li Ning Company, you can compare the effects of market volatilities on Li Ning and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and Li Ning.
Diversification Opportunities for Li Ning and Li Ning
Very weak diversification
The 3 months correlation between LNNGY and LNNGF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Co and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company 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 Co are associated (or correlated) with Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of Li Ning i.e., Li Ning and Li Ning go up and down completely randomly.
Pair Corralation between Li Ning and Li Ning
Assuming the 90 days horizon Li Ning is expected to generate 1.13 times less return on investment than Li Ning. But when comparing it to its historical volatility, Li Ning Co is 1.03 times less risky than Li Ning. It trades about 0.03 of its potential returns per unit of risk. Li Ning Company is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 233.00 in Li Ning Company on September 22, 2024 and sell it today you would earn a total of 7.00 from holding Li Ning Company or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Ning Co vs. Li Ning Company
Performance |
| Timeline |
| Li Ning |
| Li Ning Company |
Li Ning and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Ning and Li Ning
The main advantage of trading using opposite Li Ning and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.The idea behind Li Ning Co and Li Ning Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Li Ning vs. YETI Holdings | Li Ning vs. Callaway Golf | Li Ning vs. Acushnet Holdings Corp | Li Ning vs. Planet Fitness |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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