Correlation Between SHIMANO INC and Li Ning
Can any of the company-specific risk be diversified away by investing in both SHIMANO INC 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 SHIMANO INC and Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIMANO INC UNSPADR10 and Li Ning Company, you can compare the effects of market volatilities on SHIMANO INC 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 SHIMANO INC with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIMANO INC and Li Ning.
Diversification Opportunities for SHIMANO INC and Li Ning
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SHIMANO and LNLB is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SHIMANO INC UNSPADR10 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 SHIMANO INC 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 SHIMANO INC UNSPADR10 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 SHIMANO INC i.e., SHIMANO INC and Li Ning go up and down completely randomly.
Pair Corralation between SHIMANO INC and Li Ning
Assuming the 90 days trading horizon SHIMANO INC UNSPADR10 is expected to generate 1.18 times more return on investment than Li Ning. However, SHIMANO INC is 1.18 times more volatile than Li Ning Company. It trades about 0.03 of its potential returns per unit of risk. Li Ning Company is currently generating about 0.02 per unit of risk. If you would invest 1,240 in SHIMANO INC UNSPADR10 on October 19, 2024 and sell it today you would earn a total of 30.00 from holding SHIMANO INC UNSPADR10 or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIMANO INC UNSPADR10 vs. Li Ning Company
Performance |
| Timeline |
| SHIMANO INC UNSPADR10 |
| Li Ning Company |
SHIMANO INC and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIMANO INC and Li Ning
The main advantage of trading using opposite SHIMANO INC and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIMANO INC 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.| SHIMANO INC vs. Booking Holdings | SHIMANO INC vs. Oriental Land Co | SHIMANO INC vs. ANTA Sports Products | SHIMANO INC vs. Li Ning Company |
| Li Ning vs. Booking Holdings | Li Ning vs. Oriental Land Co | Li Ning vs. ANTA Sports Products | Li Ning vs. Trip Group Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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