Correlation Between Nike and LINGYI ITECH

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Can any of the company-specific risk be diversified away by investing in both Nike and LINGYI ITECH 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 Nike and LINGYI ITECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and LINGYI ITECH GUAN, you can compare the effects of market volatilities on Nike and LINGYI ITECH 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 Nike with a short position of LINGYI ITECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and LINGYI ITECH.

Diversification Opportunities for Nike and LINGYI ITECH

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nike and LINGYI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and LINGYI ITECH GUAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINGYI ITECH GUAN and Nike 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 Nike Inc are associated (or correlated) with LINGYI ITECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINGYI ITECH GUAN has no effect on the direction of Nike i.e., Nike and LINGYI ITECH go up and down completely randomly.

Pair Corralation between Nike and LINGYI ITECH

Considering the 90-day investment horizon Nike Inc is expected to generate 0.69 times more return on investment than LINGYI ITECH. However, Nike Inc is 1.44 times less risky than LINGYI ITECH. It trades about -0.02 of its potential returns per unit of risk. LINGYI ITECH GUAN is currently generating about -0.07 per unit of risk. If you would invest  12,670  in Nike Inc on June 26, 2022 and sell it today you would lose (2,968)  from holding Nike Inc or give up 23.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy79.07%
ValuesDaily Returns

Nike Inc  vs.  LINGYI ITECH GUAN

 Performance (%) 
       Timeline  
Nike Inc 
Nike Performance
0 of 100
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Nike Price Channel

LINGYI ITECH GUAN 
LINGYI Performance
0 of 100
Over the last 90 days LINGYI ITECH GUAN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LINGYI Price Channel

Nike and LINGYI ITECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and LINGYI ITECH

The main advantage of trading using opposite Nike and LINGYI ITECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, LINGYI ITECH 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 LINGYI ITECH will offset losses from the drop in LINGYI ITECH's long position.
Nike vs. BUSHVELD MINERALS LTD
The idea behind Nike Inc and LINGYI ITECH GUAN 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.
LINGYI ITECH vs. TES TOUCH EMBEDDED
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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