Correlation Between ITALIAN WINE and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Lenovo Group Limited, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Lenovo Group.
Diversification Opportunities for ITALIAN WINE and Lenovo Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ITALIAN and Lenovo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS 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 ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Lenovo Group go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Lenovo Group
Assuming the 90 days horizon ITALIAN WINE is expected to generate 2.74 times less return on investment than Lenovo Group. But when comparing it to its historical volatility, ITALIAN WINE BRANDS is 1.78 times less risky than Lenovo Group. It trades about 0.19 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Lenovo Group Limited on December 1, 2024 and sell it today you would earn a total of 740.00 from holding Lenovo Group Limited or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Lenovo Group Limited
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Lenovo Group Limited |
ITALIAN WINE and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Lenovo Group
The main advantage of trading using opposite ITALIAN WINE and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Uber Technologies | ITALIAN WINE vs. Zijin Mining Group | ITALIAN WINE vs. Kingdee International Software | ITALIAN WINE vs. Playtech plc |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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