Correlation Between LPKF Laser and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Jacquet Metal 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 LPKF Laser and Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Jacquet Metal Service, you can compare the effects of market volatilities on LPKF Laser and Jacquet Metal 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 LPKF Laser with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Jacquet Metal.
Diversification Opportunities for LPKF Laser and Jacquet Metal
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPKF and Jacquet is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of LPKF Laser i.e., LPKF Laser and Jacquet Metal go up and down completely randomly.
Pair Corralation between LPKF Laser and Jacquet Metal
Assuming the 90 days trading horizon LPKF Laser is expected to generate 2.06 times less return on investment than Jacquet Metal. In addition to that, LPKF Laser is 1.16 times more volatile than Jacquet Metal Service. It trades about 0.08 of its total potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.2 per unit of volatility. If you would invest 1,555 in Jacquet Metal Service on September 23, 2024 and sell it today you would earn a total of 125.00 from holding Jacquet Metal Service or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Jacquet Metal Service
Performance |
| Timeline |
| LPKF Laser Electronics |
| Jacquet Metal Service |
LPKF Laser and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Jacquet Metal
The main advantage of trading using opposite LPKF Laser and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| LPKF Laser vs. Uniper SE | LPKF Laser vs. Mulberry Group PLC | LPKF Laser vs. London Security Plc | LPKF Laser vs. Triad Group PLC |
| Jacquet Metal vs. Molson Coors Beverage | Jacquet Metal vs. International Consolidated Airlines | Jacquet Metal vs. LPKF Laser Electronics | Jacquet Metal vs. Alliance Data Systems |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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