Correlation Between Li Ning and SIVERS SEMICONDUCTORS

Can any of the company-specific risk be diversified away by investing in both Li Ning and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Li Ning Company and SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on Li Ning and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Ning and SIVERS SEMICONDUCTORS.

Diversification Opportunities for Li Ning and SIVERS SEMICONDUCTORS

-0.33

Correlation Coefficient

Li Ning  SIVERS SEMICONDUCTORS

Very good diversification

The 3 months correlation between LNLB and SIVERS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Li Ning Company and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS 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 Company are associated (or correlated) with SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of Li Ning i.e., Li Ning and SIVERS SEMICONDUCTORS go up and down completely randomly.

Pair Corralation between Li Ning and SIVERS SEMICONDUCTORS

Assuming the 90 days trading horizon Li Ning Company is expected to generate 0.24 times more return on investment than SIVERS SEMICONDUCTORS. However, Li Ning Company is 4.13 times less risky than SIVERS SEMICONDUCTORS. It trades about 0.1 of its potential returns per unit of risk. SIVERS SEMICONDUCTORS AB is currently generating about -0.07 per unit of risk. If you would invest  186.00  in Li Ning Company on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Li Ning Company or generate 5.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Li Ning Company  vs.  SIVERS SEMICONDUCTORS AB

Li Ning Company

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Li Ning Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Li Ning reported solid returns over the last few months and may actually be approaching a breakup point.

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Li Ning and SIVERS SEMICONDUCTORS

The main advantage of trading using opposite Li Ning and SIVERS SEMICONDUCTORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Ning position performs unexpectedly, SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS will offset losses from the drop in SIVERS SEMICONDUCTORS's long position.

The idea behind Li Ning Company and SIVERS SEMICONDUCTORS AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.