Correlation Between Lenovo Group and 3D Systems

Can any of the company-specific risk be diversified away by investing in both Lenovo Group and 3D Systems 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 3D Systems 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 3D Systems, you can compare the effects of market volatilities on Lenovo Group and 3D Systems 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 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and 3D Systems.

Diversification Opportunities for Lenovo Group and 3D Systems

-0.08

Correlation Coefficient

Lenovo Group  3D Systems

Good diversification

The 3 months correlation between Lenovo and SYV is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and 3D Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Systems 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 3D Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Systems has no effect on the direction of Lenovo Group i.e., Lenovo Group and 3D Systems go up and down completely randomly.

Pair Corralation between Lenovo Group and 3D Systems

Assuming the 90 days trading horizon Lenovo Group is expected to generate 2.51 times less return on investment than 3D Systems. But when comparing it to its historical volatility, Lenovo Group Limited is 2.72 times less risky than 3D Systems. It trades about 0.07 of its potential returns per unit of risk. 3D Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  311.00  in 3D Systems on September 22, 2024 and sell it today you would earn a total of  19.00  from holding 3D Systems or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Lenovo Group Limited  vs.  3D Systems

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.

3D Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, 3D Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lenovo Group and 3D Systems

The main advantage of trading using opposite Lenovo Group and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.

The idea behind Lenovo Group Limited and 3D Systems 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.