Correlation Between Lenovo Group and CyberAgent

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

Diversification Opportunities for Lenovo Group and CyberAgent

-0.15

Correlation Coefficient

Lenovo Group  CyberAgent

Good diversification

The 3 months correlation between Lenovo and CyberAgent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent 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 CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Lenovo Group i.e., Lenovo Group and CyberAgent go up and down completely randomly.

Pair Corralation between Lenovo Group and CyberAgent

Assuming the 90 days trading horizon Lenovo Group Limited is expected to under-perform the CyberAgent. In addition to that, Lenovo Group is 1.45 times more volatile than CyberAgent. It trades about -0.05 of its total potential returns per unit of risk. CyberAgent is currently generating about 0.01 per unit of volatility. If you would invest  650.00  in CyberAgent on October 13, 2024 and sell it today you would earn a total of  0.00  from holding CyberAgent or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Lenovo Group Limited  vs.  CyberAgent

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.

CyberAgent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberAgent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CyberAgent is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lenovo Group and CyberAgent

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

The idea behind Lenovo Group Limited and CyberAgent 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.