Correlation Between CHINA TONTINE and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE 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 CHINA TONTINE and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Lenovo Group Limited, you can compare the effects of market volatilities on CHINA TONTINE 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 CHINA TONTINE with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Lenovo Group.
Diversification Opportunities for CHINA TONTINE and Lenovo Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Lenovo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES 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 CHINA TONTINE 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 CHINA TONTINE WINES 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 CHINA TONTINE i.e., CHINA TONTINE and Lenovo Group go up and down completely randomly.
Pair Corralation between CHINA TONTINE and Lenovo Group
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 13.65 times more return on investment than Lenovo Group. However, CHINA TONTINE is 13.65 times more volatile than Lenovo Group Limited. It trades about 0.04 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.05 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on September 14, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. Lenovo Group Limited
Performance |
| Timeline |
| CHINA TONTINE WINES |
| Lenovo Group Limited |
CHINA TONTINE and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and Lenovo Group
The main advantage of trading using opposite CHINA TONTINE and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE 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.| CHINA TONTINE vs. Chiba Bank | CHINA TONTINE vs. PKSHA TECHNOLOGY INC | CHINA TONTINE vs. TFS FINANCIAL | CHINA TONTINE vs. SMA Solar Technology |
| Lenovo Group vs. United Airlines Holdings | Lenovo Group vs. CHINA TONTINE WINES | Lenovo Group vs. ITALIAN WINE BRANDS | Lenovo Group vs. Treasury Wine Estates |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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