Correlation Between Lenovo Group and Brinks
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and Brinks 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 Brinks 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 The Brinks, you can compare the effects of market volatilities on Lenovo Group and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Brinks.
Diversification Opportunities for Lenovo Group and Brinks
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lenovo and Brinks is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and The Brinks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks has no effect on the direction of Lenovo Group i.e., Lenovo Group and Brinks go up and down completely randomly.
Pair Corralation between Lenovo Group and Brinks
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 2.43 times more return on investment than Brinks. However, Lenovo Group is 2.43 times more volatile than The Brinks. It trades about 0.28 of its potential returns per unit of risk. The Brinks is currently generating about -0.09 per unit of risk. If you would invest 2,160 in Lenovo Group Limited on September 29, 2024 and sell it today you would earn a total of 420.00 from holding Lenovo Group Limited or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. The Brinks
Performance |
| Timeline |
| Lenovo Group Limited |
| Brinks |
Lenovo Group and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and Brinks
The main advantage of trading using opposite Lenovo Group and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| Lenovo Group vs. Apple Inc | Lenovo Group vs. Apple Inc | Lenovo Group vs. Apple Inc | Lenovo Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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