Correlation Between CHINA SOUTHN and Li Ning

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

By analyzing existing cross correlation between CHINA SOUTHN AIR H and Li Ning Company, you can compare the effects of market volatilities on CHINA SOUTHN 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 CHINA SOUTHN with a short position of Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Li Ning.

Diversification Opportunities for CHINA SOUTHN and Li Ning

0.0

Correlation Coefficient

CHINA SOUTHN  Li Ning

Pay attention - limited upside

The 3 months correlation between CHINA and LNLB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H 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 CHINA SOUTHN 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 CHINA SOUTHN AIR H 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 CHINA SOUTHN i.e., CHINA SOUTHN and Li Ning go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and Li Ning

If you would invest  37.00  in CHINA SOUTHN AIR H on October 4, 2024 and sell it today you would earn a total of  12.00  from holding CHINA SOUTHN AIR H or generate 32.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

CHINA SOUTHN AIR H   vs.  Li Ning Company

CHINA SOUTHN AIR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CHINA SOUTHN unveiled solid returns over the last few months and may actually be approaching a breakup point.

Li Ning Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Ning Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHINA SOUTHN and Li Ning

The main advantage of trading using opposite CHINA SOUTHN and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN 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.

The idea behind CHINA SOUTHN AIR H and Li Ning Company 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.