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 Co 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
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LNNGY and BANDAI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Co 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 Co 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 Co is expected to under-perform the BANDAI NAMCO. In addition to that, Li Ning is 1.83 times more volatile than BANDAI NAMCO Holdings. It trades about -0.06 of its total potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about 0.02 per unit of volatility. If you would invest 1,035 in BANDAI NAMCO Holdings on September 30, 2024 and sell it today you would earn a total of 160.00 from holding BANDAI NAMCO Holdings or generate 15.46% 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. BANDAI NAMCO Holdings
Performance |
| Timeline |
| Li Ning |
| 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. Hasbro Inc | Li Ning vs. YETI Holdings | Li Ning vs. BANDAI NAMCO Holdings | Li Ning vs. Madison Square Garden |
| BANDAI NAMCO vs. Hasbro Inc | BANDAI NAMCO vs. YETI Holdings | BANDAI NAMCO vs. BANDAI NAMCO Holdings | BANDAI NAMCO vs. Madison Square Garden |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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