Correlation Between Lenovo Group and Identiv

Can any of the company-specific risk be diversified away by investing in both Lenovo Group and Identiv 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 Identiv 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 Identiv, you can compare the effects of market volatilities on Lenovo Group and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Identiv.

Diversification Opportunities for Lenovo Group and Identiv

-0.47

Correlation Coefficient

Lenovo Group  Identiv

Very good diversification

The 3 months correlation between Lenovo and Identiv is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Lenovo Group i.e., Lenovo Group and Identiv go up and down completely randomly.

Pair Corralation between Lenovo Group and Identiv

Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 0.78 times more return on investment than Identiv. However, Lenovo Group Limited is 1.29 times less risky than Identiv. It trades about 0.07 of its potential returns per unit of risk. Identiv is currently generating about -0.05 per unit of risk. If you would invest  2,198  in Lenovo Group Limited on September 22, 2024 and sell it today you would earn a total of  82.00  from holding Lenovo Group Limited or generate 3.73% return on investment over 90 days.

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

Lenovo Group Limited  vs.  Identiv

Lenovo Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lenovo Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Lenovo Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Identiv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lenovo Group and Identiv

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

The idea behind Lenovo Group Limited and Identiv 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.