Correlation Between Lenovo Group and Stratasys

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

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

Diversification Opportunities for Lenovo Group and Stratasys

-0.35

Correlation Coefficient

Lenovo Group  Stratasys

Very good diversification

The 3 months correlation between Lenovo and Stratasys is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys and Lenovo Group 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 Limited are associated (or correlated) with Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Lenovo Group i.e., Lenovo Group and Stratasys go up and down completely randomly.

Pair Corralation between Lenovo Group and Stratasys

Assuming the 90 days horizon Lenovo Group is expected to generate 48.36 times less return on investment than Stratasys. But when comparing it to its historical volatility, Lenovo Group Limited is 1.41 times less risky than Stratasys. It trades about 0.0 of its potential returns per unit of risk. Stratasys is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  655.00  in Stratasys on October 15, 2024 and sell it today you would earn a total of  211.00  from holding Stratasys or generate 32.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lenovo Group Limited  vs.  Stratasys

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. Despite nearly stable basic indicators, Lenovo Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Stratasys

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Stratasys reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lenovo Group and Stratasys

The main advantage of trading using opposite Lenovo Group and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.

The idea behind Lenovo Group Limited and Stratasys 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.