Correlation Between Scottish Mortgage and Lenovo Group

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

Diversification Opportunities for Scottish Mortgage and Lenovo Group

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Scottish and Lenovo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited and Scottish Mortgage 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 Scottish Mortgage Investment 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 Limited has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and Lenovo Group go up and down completely randomly.

Pair Corralation between Scottish Mortgage and Lenovo Group

Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 0.43 times more return on investment than Lenovo Group. However, Scottish Mortgage Investment is 2.34 times less risky than Lenovo Group. It trades about 0.2 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.01 per unit of risk. If you would invest  1,016  in Scottish Mortgage Investment on October 9, 2024 and sell it today you would earn a total of  152.00  from holding Scottish Mortgage Investment or generate 14.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Scottish Mortgage Investment  vs.  Lenovo Group Limited

 Performance 
       Timeline  
Scottish Mortgage 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Scottish Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.
Lenovo Group Limited 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lenovo Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lenovo Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Scottish Mortgage and Lenovo Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scottish Mortgage and Lenovo Group

The main advantage of trading using opposite Scottish Mortgage and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage 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 Scottish Mortgage Investment and Lenovo Group Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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