Correlation Between Lenovo Group and Suncorp Group

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

Diversification Opportunities for Lenovo Group and Suncorp Group

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Lenovo and Suncorp is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Lenovo Group i.e., Lenovo Group and Suncorp Group go up and down completely randomly.

Pair Corralation between Lenovo Group and Suncorp Group

Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 1.56 times more return on investment than Suncorp Group. However, Lenovo Group is 1.56 times more volatile than Suncorp Group Limited. It trades about 0.05 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about 0.02 per unit of risk. If you would invest  2,396  in Lenovo Group Limited on September 30, 2024 and sell it today you would earn a total of  184.00  from holding Lenovo Group Limited or generate 7.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Lenovo Group Limited  vs.  Suncorp Group Limited

 Performance 
       Timeline  
Lenovo Group Limited 

Risk-Adjusted Performance

4 of 100

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

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Suncorp Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lenovo Group and Suncorp Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lenovo Group and Suncorp Group

The main advantage of trading using opposite Lenovo Group and Suncorp Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Suncorp Group 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 Suncorp Group will offset losses from the drop in Suncorp Group's long position.
The idea behind Lenovo Group Limited and Suncorp Group Limited 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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