Correlation Between Lenovo Group and ASSA ABLOY
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY AB, you can compare the effects of market volatilities on Lenovo Group and ASSA ABLOY 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 ASSA ABLOY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and ASSA ABLOY.
Diversification Opportunities for Lenovo Group and ASSA ABLOY
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lenovo and ASSA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB 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 ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of Lenovo Group i.e., Lenovo Group and ASSA ABLOY go up and down completely randomly.
Pair Corralation between Lenovo Group and ASSA ABLOY
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 2.55 times more return on investment than ASSA ABLOY. However, Lenovo Group is 2.55 times more volatile than ASSA ABLOY AB. It trades about 0.03 of its potential returns per unit of risk. ASSA ABLOY AB is currently generating about -0.26 per unit of risk. If you would invest 2,200 in Lenovo Group Limited on October 18, 2024 and sell it today you would earn a total of 20.00 from holding Lenovo Group Limited or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. ASSA ABLOY AB
Performance |
| Timeline |
| Lenovo Group Limited |
| ASSA ABLOY AB |
Lenovo Group and ASSA ABLOY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and ASSA ABLOY
The main advantage of trading using opposite Lenovo Group and ASSA ABLOY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, ASSA ABLOY 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 ASSA ABLOY will offset losses from the drop in ASSA ABLOY's long position.| Lenovo Group vs. FORMPIPE SOFTWARE AB | Lenovo Group vs. Magic Software Enterprises | Lenovo Group vs. Kingdee International Software | Lenovo Group vs. Easy Software AG |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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