Correlation Between Lenovo Group and QURATE RETAIL
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and QURATE RETAIL 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 QURATE RETAIL 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 QURATE RETAIL INC, you can compare the effects of market volatilities on Lenovo Group and QURATE RETAIL 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 QURATE RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and QURATE RETAIL.
Diversification Opportunities for Lenovo Group and QURATE RETAIL
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lenovo and QURATE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and QURATE RETAIL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QURATE RETAIL INC 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 QURATE RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QURATE RETAIL INC has no effect on the direction of Lenovo Group i.e., Lenovo Group and QURATE RETAIL go up and down completely randomly.
Pair Corralation between Lenovo Group and QURATE RETAIL
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 0.81 times more return on investment than QURATE RETAIL. However, Lenovo Group Limited is 1.24 times less risky than QURATE RETAIL. It trades about -0.02 of its potential returns per unit of risk. QURATE RETAIL INC is currently generating about -0.04 per unit of risk. If you would invest 2,451 in Lenovo Group Limited on September 3, 2024 and sell it today you would lose (271.00) from holding Lenovo Group Limited or give up 11.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. QURATE RETAIL INC
Performance |
| Timeline |
| Lenovo Group Limited |
| QURATE RETAIL INC |
Lenovo Group and QURATE RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and QURATE RETAIL
The main advantage of trading using opposite Lenovo Group and QURATE RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, QURATE RETAIL 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 QURATE RETAIL will offset losses from the drop in QURATE RETAIL's long position.| Lenovo Group vs. Arista Networks | Lenovo Group vs. Lenovo Group Limited | Lenovo Group vs. Seiko Epson | Lenovo Group vs. Legend Holdings |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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