Correlation Between Digilife Technologies and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies 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 Digilife Technologies and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and Lenovo Group Limited, you can compare the effects of market volatilities on Digilife Technologies 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 Digilife Technologies with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Lenovo Group.
Diversification Opportunities for Digilife Technologies and Lenovo Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digilife and Lenovo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited 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 Digilife Technologies 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 Digilife Technologies Limited 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 Digilife Technologies i.e., Digilife Technologies and Lenovo Group go up and down completely randomly.
Pair Corralation between Digilife Technologies and Lenovo Group
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Lenovo Group. In addition to that, Digilife Technologies is 1.26 times more volatile than Lenovo Group Limited. It trades about 0.0 of its total potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.09 per unit of volatility. If you would invest 33.00 in Lenovo Group Limited on October 23, 2024 and sell it today you would earn a total of 83.00 from holding Lenovo Group Limited or generate 251.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digilife Technologies Limited vs. Lenovo Group Limited
Performance |
| Timeline |
| Digilife Technologies |
| Lenovo Group Limited |
Digilife Technologies and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and Lenovo Group
The main advantage of trading using opposite Digilife Technologies and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies 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.| Digilife Technologies vs. CAREER EDUCATION | Digilife Technologies vs. DeVry Education Group | Digilife Technologies vs. betterU Education Corp | Digilife Technologies vs. GALENA MINING LTD |
| Lenovo Group vs. FLOW TRADERS LTD | Lenovo Group vs. Fast Retailing Co | Lenovo Group vs. SCANSOURCE | Lenovo Group vs. YATRA ONLINE DL 0001 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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