Correlation Between Canon and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both Canon and Lenovo Group 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 Canon and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Inc and Lenovo Group Ltd, you can compare the effects of market volatilities on Canon and Lenovo Group 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 Canon with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and Lenovo Group.
Diversification Opportunities for Canon and Lenovo Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canon and Lenovo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Lenovo Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group and Canon 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 Canon Inc are associated (or correlated) with Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group has no effect on the direction of Canon i.e., Canon and Lenovo Group go up and down completely randomly.
Pair Corralation between Canon and Lenovo Group
Assuming the 90 days horizon Canon Inc is expected to generate 0.58 times more return on investment than Lenovo Group. However, Canon Inc is 1.74 times less risky than Lenovo Group. It trades about -0.06 of its potential returns per unit of risk. Lenovo Group Ltd is currently generating about -0.11 per unit of risk. If you would invest 2,954 in Canon Inc on January 25, 2024 and sell it today you would lose (47.00) from holding Canon Inc or give up 1.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Canon Inc vs. Lenovo Group Ltd
Performance |
Timeline |
Canon Inc |
Lenovo Group |
Canon and Lenovo Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canon and Lenovo Group
The main advantage of trading using opposite Canon and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon position performs unexpectedly, Lenovo Group 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 Lenovo Group will offset losses from the drop in Lenovo Group's long position.Canon vs. DPCM Capital | Canon vs. Quantum ComputingInc | Canon vs. Rigetti Computing | Canon vs. Nano Dimension |
Lenovo Group vs. DPCM Capital | Lenovo Group vs. Quantum ComputingInc | Lenovo Group vs. Rigetti Computing | Lenovo Group vs. Nano Dimension |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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