Correlation Between Lenovo Group and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on Lenovo Group and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and LIFENET INSURANCE.
Diversification Opportunities for Lenovo Group and LIFENET INSURANCE
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lenovo and LIFENET is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Lenovo Group i.e., Lenovo Group and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Lenovo Group and LIFENET INSURANCE
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 1.04 times more return on investment than LIFENET INSURANCE. However, Lenovo Group is 1.04 times more volatile than LIFENET INSURANCE CO. It trades about 0.05 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.05 per unit of risk. If you would invest 1,376 in Lenovo Group Limited on September 3, 2024 and sell it today you would earn a total of 844.00 from holding Lenovo Group Limited or generate 61.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| Lenovo Group Limited |
| LIFENET INSURANCE |
Lenovo Group and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and LIFENET INSURANCE
The main advantage of trading using opposite Lenovo Group and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| Lenovo Group vs. LIFENET INSURANCE CO | Lenovo Group vs. Adtalem Global Education | Lenovo Group vs. Xinhua Winshare Publishing | Lenovo Group vs. Japan Post Insurance |
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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 Stocks Directory module to find actively traded stocks across global markets.
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