Correlation Between COMPUTERSHARE and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both COMPUTERSHARE 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 COMPUTERSHARE and Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMPUTERSHARE and Lenovo Group Limited, you can compare the effects of market volatilities on COMPUTERSHARE 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 COMPUTERSHARE with a short position of Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUTERSHARE and Lenovo Group.
Diversification Opportunities for COMPUTERSHARE and Lenovo Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between COMPUTERSHARE and Lenovo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTERSHARE 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 COMPUTERSHARE 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 COMPUTERSHARE 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 COMPUTERSHARE i.e., COMPUTERSHARE and Lenovo Group go up and down completely randomly.
Pair Corralation between COMPUTERSHARE and Lenovo Group
Assuming the 90 days trading horizon COMPUTERSHARE is expected to generate 0.52 times more return on investment than Lenovo Group. However, COMPUTERSHARE is 1.94 times less risky than Lenovo Group. It trades about 0.09 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.03 per unit of risk. If you would invest 1,502 in COMPUTERSHARE on October 22, 2024 and sell it today you would earn a total of 558.00 from holding COMPUTERSHARE or generate 37.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
COMPUTERSHARE vs. Lenovo Group Limited
Performance |
| Timeline |
| COMPUTERSHARE |
| Lenovo Group Limited |
COMPUTERSHARE and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMPUTERSHARE and Lenovo Group
The main advantage of trading using opposite COMPUTERSHARE and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMPUTERSHARE 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.| COMPUTERSHARE vs. DELTA AIR LINES | COMPUTERSHARE vs. Fair Isaac Corp | COMPUTERSHARE vs. RYANAIR HLDGS ADR | COMPUTERSHARE vs. JAPAN AIRLINES |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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