Correlation Between LPKF Laser and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on LPKF Laser and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Microchip Technology.
Diversification Opportunities for LPKF Laser and Microchip Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LPKF and Microchip is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of LPKF Laser i.e., LPKF Laser and Microchip Technology go up and down completely randomly.
Pair Corralation between LPKF Laser and Microchip Technology
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.76 times more return on investment than Microchip Technology. However, LPKF Laser Electronics is 1.31 times less risky than Microchip Technology. It trades about 0.0 of its potential returns per unit of risk. Microchip Technology is currently generating about -0.02 per unit of risk. If you would invest 954.00 in LPKF Laser Electronics on January 24, 2025 and sell it today you would lose (97.00) from holding LPKF Laser Electronics or give up 10.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Microchip Technology
Performance |
| Timeline |
| LPKF Laser Electronics |
| Microchip Technology |
LPKF Laser and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Microchip Technology
The main advantage of trading using opposite LPKF Laser and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| LPKF Laser vs. Pan American Silver | LPKF Laser vs. Atalaya Mining | LPKF Laser vs. Bisichi Mining PLC | LPKF Laser vs. Virgin Wines UK |
| Microchip Technology vs. Systemair AB | Microchip Technology vs. Compal Electronics GDR | Microchip Technology vs. Ecclesiastical Insurance Office | Microchip Technology vs. Delta Air Lines |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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