Correlation Between Lenovo Group and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and CITIC Telecom 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 CITIC Telecom 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 CITIC Telecom International, you can compare the effects of market volatilities on Lenovo Group and CITIC Telecom 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 CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and CITIC Telecom.
Diversification Opportunities for Lenovo Group and CITIC Telecom
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lenovo and CITIC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern 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 CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Lenovo Group i.e., Lenovo Group and CITIC Telecom go up and down completely randomly.
Pair Corralation between Lenovo Group and CITIC Telecom
Assuming the 90 days horizon Lenovo Group is expected to generate 1.88 times less return on investment than CITIC Telecom. But when comparing it to its historical volatility, Lenovo Group Limited is 2.19 times less risky than CITIC Telecom. It trades about 0.09 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.09 in CITIC Telecom International on October 25, 2024 and sell it today you would earn a total of 21.91 from holding CITIC Telecom International or generate 535.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. CITIC Telecom International
Performance |
| Timeline |
| Lenovo Group Limited |
| CITIC Telecom Intern |
Lenovo Group and CITIC Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and CITIC Telecom
The main advantage of trading using opposite Lenovo Group and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.| Lenovo Group vs. Charter Communications | Lenovo Group vs. GREENX METALS LTD | Lenovo Group vs. FIREWEED METALS P | Lenovo Group vs. Aluminum of |
| CITIC Telecom vs. GRUPO CARSO A1 | CITIC Telecom vs. REMEDY ENTERTAINMENT OYJ | CITIC Telecom vs. Grupo Carso SAB | CITIC Telecom vs. ANTA SPORTS PRODUCT |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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