Correlation Between Lenovo Group and Securitas
Can any of the company-specific risk be diversified away by investing in both Lenovo Group and Securitas 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 Securitas 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 Securitas AB, you can compare the effects of market volatilities on Lenovo Group and Securitas 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 Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Securitas.
Diversification Opportunities for Lenovo Group and Securitas
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lenovo and Securitas is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of Lenovo Group i.e., Lenovo Group and Securitas go up and down completely randomly.
Pair Corralation between Lenovo Group and Securitas
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 3.05 times more return on investment than Securitas. However, Lenovo Group is 3.05 times more volatile than Securitas AB. It trades about 0.28 of its potential returns per unit of risk. Securitas AB is currently generating about 0.07 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. Securitas AB
Performance |
| Timeline |
| Lenovo Group Limited |
| Securitas AB |
Lenovo Group and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and Securitas
The main advantage of trading using opposite Lenovo Group and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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