Correlation Between Lenovo Group and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and Halma 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 Halma 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 Halma plc, you can compare the effects of market volatilities on Lenovo Group and Halma 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Halma Plc.
Diversification Opportunities for Lenovo Group and Halma Plc
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lenovo and Halma is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Lenovo Group i.e., Lenovo Group and Halma Plc go up and down completely randomly.
Pair Corralation between Lenovo Group and Halma Plc
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 2.22 times more return on investment than Halma Plc. However, Lenovo Group is 2.22 times more volatile than Halma plc. It trades about 0.02 of its potential returns per unit of risk. Halma plc is currently generating about -0.1 per unit of risk. If you would invest 2,280 in Lenovo Group Limited on October 17, 2024 and sell it today you would earn a total of 0.00 from holding Lenovo Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. Halma plc
Performance |
| Timeline |
| Lenovo Group Limited |
| Halma plc |
Lenovo Group and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and Halma Plc
The main advantage of trading using opposite Lenovo Group and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Halma 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 Halma Plc will offset losses from the drop in Halma Plc'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 |
| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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