Correlation Between PT Bank and Lenovo Group

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

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

Diversification Opportunities for PT Bank and Lenovo Group

0.52

Correlation Coefficient

PT Bank  Lenovo Group

Very weak diversification

The 3 months correlation between BYRA and Lenovo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat 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 PT Bank 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 PT Bank Rakyat 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 PT Bank i.e., PT Bank and Lenovo Group go up and down completely randomly.

Pair Corralation between PT Bank and Lenovo Group

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Lenovo Group. In addition to that, PT Bank is 1.94 times more volatile than Lenovo Group Limited. It trades about 0.0 of its total potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.1 per unit of volatility. If you would invest  2,280  in Lenovo Group Limited on October 4, 2024 and sell it today you would earn a total of  140.00  from holding Lenovo Group Limited or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

PT Bank Rakyat  vs.  Lenovo Group Limited

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lenovo Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lenovo Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lenovo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and Lenovo Group

The main advantage of trading using opposite PT Bank and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Rakyat 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.