Correlation Between Apple and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Lenovo Group Limited, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Lenovo Group.
Diversification Opportunities for Apple and Lenovo Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Lenovo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Lenovo Group go up and down completely randomly.
Pair Corralation between Apple and Lenovo Group
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.55 times more return on investment than Lenovo Group. However, Apple Inc is 1.83 times less risky than Lenovo Group. It trades about 0.05 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about -0.35 per unit of risk. If you would invest 21,629 in Apple Inc on August 24, 2024 and sell it today you would earn a total of 266.00 from holding Apple Inc or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apple Inc vs. Lenovo Group Limited
Performance |
| Timeline |
| Apple Inc |
| Lenovo Group Limited |
Apple and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Lenovo Group
The main advantage of trading using opposite Apple and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. INFORMATION SVC GRP | Apple vs. DATANG INTL POW | Apple vs. JIAHUA STORES | Apple vs. Qurate Retail Series |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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