Correlation Between Lenovo Group and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS, you can compare the effects of market volatilities on Lenovo Group and LIFEWAY FOODS 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 LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and LIFEWAY FOODS.
Diversification Opportunities for Lenovo Group and LIFEWAY FOODS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lenovo and LIFEWAY is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS 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 LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of Lenovo Group i.e., Lenovo Group and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between Lenovo Group and LIFEWAY FOODS
Assuming the 90 days trading horizon Lenovo Group is expected to generate 3.2 times less return on investment than LIFEWAY FOODS. But when comparing it to its historical volatility, Lenovo Group Limited is 2.07 times less risky than LIFEWAY FOODS. It trades about 0.05 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 525.00 in LIFEWAY FOODS on September 12, 2024 and sell it today you would earn a total of 1,735 from holding LIFEWAY FOODS or generate 330.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lenovo Group Limited vs. LIFEWAY FOODS
Performance |
| Timeline |
| Lenovo Group Limited |
| LIFEWAY FOODS |
Lenovo Group and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and LIFEWAY FOODS
The main advantage of trading using opposite Lenovo Group and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, LIFEWAY FOODS 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 LIFEWAY FOODS will offset losses from the drop in LIFEWAY FOODS's long position.| Lenovo Group vs. LIFEWAY FOODS | Lenovo Group vs. PACIFIC ONLINE | Lenovo Group vs. Ebro Foods SA | Lenovo Group vs. United Natural Foods |
| LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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