Correlation Between Perusahaan Perseroan and Lenovo Group

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perseroan and Lenovo 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 Perusahaan Perseroan and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perusahaan Perseroan PT and Lenovo Group Limited, you can compare the effects of market volatilities on Perusahaan Perseroan and Lenovo 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 Perusahaan Perseroan with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Lenovo Group.

Diversification Opportunities for Perusahaan Perseroan and Lenovo Group

0.5

Correlation Coefficient

Perusahaan Perseroan  Lenovo Group

Very weak diversification

The 3 months correlation between Perusahaan and Lenovo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Lenovo Group go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Lenovo Group

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Lenovo Group. But the stock apears to be less risky and, when comparing its historical volatility, Perusahaan Perseroan PT is 1.04 times less risky than Lenovo Group. The stock trades about -0.02 of its potential returns per unit of risk. The Lenovo Group Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,534  in Lenovo Group Limited on October 4, 2024 and sell it today you would lose (74.00) from holding Lenovo Group Limited or give up 2.92% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  Lenovo Group Limited

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 comparatively stable basic indicators, Lenovo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Perusahaan Perseroan and Lenovo Group

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

The idea behind Perusahaan Perseroan PT and Lenovo 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.