Correlation Between Lenovo and Lenovo Group

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

By analyzing existing cross correlation between Lenovo Group and Lenovo Group Ltd, you can compare the effects of market volatilities on Lenovo 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 Lenovo with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo and Lenovo Group.

Diversification Opportunities for Lenovo and Lenovo Group

0.95

Correlation Coefficient

Lenovo  Lenovo Group

Almost no diversification

The 3 months correlation between Lenovo and Lenovo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group and Lenovo Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group and Lenovo 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 Lenovo Group 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 Lenovo i.e., Lenovo and Lenovo Group go up and down completely randomly.

Pair Corralation between Lenovo and Lenovo Group

Assuming the 90 days horizon Lenovo Group is expected to generate 1.25 times more return on investment than Lenovo Group. However, Lenovo is 1.25 times more volatile than Lenovo Group Ltd. It trades about 0.03 of its potential returns per unit of risk. Lenovo Group Ltd is currently generating about 0.01 per unit of risk. If you would invest  105.00  in Lenovo Group on January 19, 2024 and sell it today you would earn a total of  5.00  from holding Lenovo Group or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Lenovo Group  vs.  Lenovo Group Ltd

Lenovo Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lenovo Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lenovo Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lenovo and Lenovo Group

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

The idea behind Lenovo Group and Lenovo Group Ltd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.