Correlation Between CVW CLEANTECH and Li Ning
Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH 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 CVW CLEANTECH and Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CLEANTECH INC and Li Ning Company, you can compare the effects of market volatilities on CVW CLEANTECH 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 CVW CLEANTECH with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and Li Ning.
Diversification Opportunities for CVW CLEANTECH and Li Ning
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVW and LNLB is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC 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 CVW CLEANTECH 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 CVW CLEANTECH INC 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 CVW CLEANTECH i.e., CVW CLEANTECH and Li Ning go up and down completely randomly.
Pair Corralation between CVW CLEANTECH and Li Ning
Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to under-perform the Li Ning. But the stock apears to be less risky and, when comparing its historical volatility, CVW CLEANTECH INC is 1.07 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 197.00 in Li Ning Company on November 5, 2024 and sell it today you would earn a total of 6.00 from holding Li Ning Company or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CLEANTECH INC vs. Li Ning Company
Performance |
| Timeline |
| CVW CLEANTECH INC |
| Li Ning Company |
CVW CLEANTECH and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CLEANTECH and Li Ning
The main advantage of trading using opposite CVW CLEANTECH and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CLEANTECH 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.| CVW CLEANTECH vs. Yuexiu Transport Infrastructure | CVW CLEANTECH vs. INTERNET INJPADR 1 | CVW CLEANTECH vs. China Communications Services | CVW CLEANTECH vs. TITANIUM TRANSPORTGROUP |
| Li Ning vs. SOFI TECHNOLOGIES | Li Ning vs. Addtech AB | Li Ning vs. Sunny Optical Technology | Li Ning vs. VELA TECHNOLPLC LS 0001 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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