Correlation Between Cardinal Health and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and LPKF Laser 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 Cardinal Health and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and LPKF Laser Electronics, you can compare the effects of market volatilities on Cardinal Health and LPKF Laser 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 Cardinal Health with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and LPKF Laser.
Diversification Opportunities for Cardinal Health and LPKF Laser
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and LPKF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Cardinal Health 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 Cardinal Health are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Cardinal Health i.e., Cardinal Health and LPKF Laser go up and down completely randomly.
Pair Corralation between Cardinal Health and LPKF Laser
Assuming the 90 days trading horizon Cardinal Health is expected to generate 4.65 times less return on investment than LPKF Laser. But when comparing it to its historical volatility, Cardinal Health is 3.12 times less risky than LPKF Laser. It trades about 0.2 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 820.00 in LPKF Laser Electronics on October 13, 2024 and sell it today you would earn a total of 111.00 from holding LPKF Laser Electronics or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Cardinal Health vs. LPKF Laser Electronics
Performance |
| Timeline |
| Cardinal Health |
| LPKF Laser Electronics |
Cardinal Health and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and LPKF Laser
The main advantage of trading using opposite Cardinal Health and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Cardinal Health vs. Mineral Financial Investments | Cardinal Health vs. EJF Investments | Cardinal Health vs. Cizzle Biotechnology Holdings | Cardinal Health vs. Livermore Investments Group |
| LPKF Laser vs. Morgan Advanced Materials | LPKF Laser vs. Abingdon Health Plc | LPKF Laser vs. Cardinal Health | LPKF Laser vs. Martin Marietta Materials |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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