Correlation Between Callaway Golf and Li Ning
Can any of the company-specific risk be diversified away by investing in both Callaway Golf 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 Callaway Golf and Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callaway Golf and Li Ning Company, you can compare the effects of market volatilities on Callaway Golf 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 Callaway Golf with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callaway Golf and Li Ning.
Diversification Opportunities for Callaway Golf and Li Ning
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Callaway and LNNGF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Callaway Golf 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 Callaway Golf 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 Callaway Golf 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 Callaway Golf i.e., Callaway Golf and Li Ning go up and down completely randomly.
Pair Corralation between Callaway Golf and Li Ning
Given the investment horizon of 90 days Callaway Golf is expected to under-perform the Li Ning. But the stock apears to be less risky and, when comparing its historical volatility, Callaway Golf is 1.06 times less risky than Li Ning. The stock trades about -0.16 of its potential returns per unit of risk. The Li Ning Company is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 208.00 in Li Ning Company on August 27, 2024 and sell it today you would lose (1.00) from holding Li Ning Company or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Callaway Golf vs. Li Ning Company
Performance |
| Timeline |
| Callaway Golf |
| Li Ning Company |
Callaway Golf and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callaway Golf and Li Ning
The main advantage of trading using opposite Callaway Golf and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callaway Golf 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.| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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