Correlation Between Lenovo Group and ACHETER-LOUER

Can any of the company-specific risk be diversified away by investing in both Lenovo Group and ACHETER-LOUER 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 ACHETER-LOUER 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 ACHETER LOUER EO 145612, you can compare the effects of market volatilities on Lenovo Group and ACHETER-LOUER 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 ACHETER-LOUER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and ACHETER-LOUER.

Diversification Opportunities for Lenovo Group and ACHETER-LOUER

0.72

Correlation Coefficient

Lenovo Group  ACHETER-LOUER

Poor diversification

The 3 months correlation between Lenovo and ACHETER-LOUER is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and ACHETER LOUER EO 145612 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACHETER LOUER EO 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 ACHETER-LOUER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACHETER LOUER EO has no effect on the direction of Lenovo Group i.e., Lenovo Group and ACHETER-LOUER go up and down completely randomly.

Pair Corralation between Lenovo Group and ACHETER-LOUER

Assuming the 90 days trading horizon Lenovo Group is expected to generate 43.18 times less return on investment than ACHETER-LOUER. But when comparing it to its historical volatility, Lenovo Group Limited is 32.04 times less risky than ACHETER-LOUER. It trades about 0.05 of its potential returns per unit of risk. ACHETER LOUER EO 145612 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  100,000,000  in ACHETER LOUER EO 145612 on October 13, 2024 and sell it today you would lose (99,999,989) from holding ACHETER LOUER EO 145612 or give up 100.0% of portfolio value over 90 days.

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

Lenovo Group Limited  vs.  ACHETER LOUER EO 145612

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ACHETER LOUER EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACHETER LOUER EO 145612 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Pair Trading with Lenovo Group and ACHETER-LOUER

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

The idea behind Lenovo Group Limited and ACHETER LOUER EO 145612 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.