Correlation Between Lenovo Group and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and Pentair Plc 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 Pentair Plc 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 Pentair plc, you can compare the effects of market volatilities on Lenovo Group and Pentair Plc 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 Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Pentair Plc.
Diversification Opportunities for Lenovo Group and Pentair Plc
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lenovo and Pentair is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc 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 Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Lenovo Group i.e., Lenovo Group and Pentair Plc go up and down completely randomly.
Pair Corralation between Lenovo Group and Pentair Plc
Assuming the 90 days horizon Lenovo Group Limited is expected to generate 3.57 times more return on investment than Pentair Plc. However, Lenovo Group is 3.57 times more volatile than Pentair plc. It trades about 0.15 of its potential returns per unit of risk. Pentair plc is currently generating about 0.16 per unit of risk. If you would invest 106.00 in Lenovo Group Limited on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Lenovo Group Limited or generate 10.38% 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. Pentair plc
Performance |
| Timeline |
| Lenovo Group Limited |
| Pentair plc |
Lenovo Group and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and Pentair Plc
The main advantage of trading using opposite Lenovo Group and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.| Lenovo Group vs. Corporate Office Properties | Lenovo Group vs. MTI WIRELESS EDGE | Lenovo Group vs. Digilife Technologies Limited | Lenovo Group vs. Infrastrutture Wireless Italiane |
| Pentair Plc vs. Schneider Electric SE | Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. SIVERS SEMICONDUCTORS AB | Pentair Plc vs. Norsk Hydro ASA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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