Correlation Between Urban Outfitters and Li Ning
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters 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 Urban Outfitters and Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and Li Ning Company, you can compare the effects of market volatilities on Urban Outfitters 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 Urban Outfitters with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Li Ning.
Diversification Opportunities for Urban Outfitters and Li Ning
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Urban and LNLB is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters i.e., Urban Outfitters and Li Ning go up and down completely randomly.
Pair Corralation between Urban Outfitters and Li Ning
Assuming the 90 days horizon Urban Outfitters is expected to generate 0.97 times more return on investment than Li Ning. However, Urban Outfitters is 1.03 times less risky than Li Ning. It trades about 0.36 of its potential returns per unit of risk. Li Ning Company is currently generating about 0.03 per unit of risk. If you would invest 3,260 in Urban Outfitters on October 26, 2024 and sell it today you would earn a total of 2,590 from holding Urban Outfitters or generate 79.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Outfitters vs. Li Ning Company
Performance |
| Timeline |
| Urban Outfitters |
| Li Ning Company |
Urban Outfitters and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and Li Ning
The main advantage of trading using opposite Urban Outfitters and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters 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.| Urban Outfitters vs. The TJX Companies | Urban Outfitters vs. Lululemon Athletica | Urban Outfitters vs. Superior Plus Corp | Urban Outfitters vs. Origin Agritech |
| Li Ning vs. Direct Line Insurance | Li Ning vs. Gold Road Resources | Li Ning vs. Chiba Bank | Li Ning vs. BANKINTER ADR 2007 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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