Correlation Between MTI WIRELESS and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and Lenovo Group 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 MTI WIRELESS and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and Lenovo Group Limited, you can compare the effects of market volatilities on MTI WIRELESS and Lenovo Group 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 MTI WIRELESS with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and Lenovo Group.
Diversification Opportunities for MTI WIRELESS and Lenovo Group
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MTI and Lenovo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited and MTI WIRELESS 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 MTI WIRELESS EDGE are associated (or correlated) with Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and Lenovo Group go up and down completely randomly.
Pair Corralation between MTI WIRELESS and Lenovo Group
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to generate 3.51 times more return on investment than Lenovo Group. However, MTI WIRELESS is 3.51 times more volatile than Lenovo Group Limited. It trades about 0.1 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.15 per unit of risk. If you would invest 44.00 in MTI WIRELESS EDGE on October 8, 2024 and sell it today you would earn a total of 4.00 from holding MTI WIRELESS EDGE or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. Lenovo Group Limited
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| Lenovo Group Limited |
MTI WIRELESS and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and Lenovo Group
The main advantage of trading using opposite MTI WIRELESS and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, Lenovo Group 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 Lenovo Group will offset losses from the drop in Lenovo Group's long position.| MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc |
| Lenovo Group vs. Lenovo Group Limited | Lenovo Group vs. Seiko Epson | Lenovo Group vs. Acer Incorporated | Lenovo Group vs. Toshiba Tec |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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