Correlation Between LPKF Laser and United Airlines
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on LPKF Laser and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and United Airlines.
Diversification Opportunities for LPKF Laser and United Airlines
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LPKF and United is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of LPKF Laser i.e., LPKF Laser and United Airlines go up and down completely randomly.
Pair Corralation between LPKF Laser and United Airlines
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 3.64 times less risky than United Airlines. The stock trades about -0.11 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 7,650 in United Airlines Holdings on August 29, 2024 and sell it today you would earn a total of 2,171 from holding United Airlines Holdings or generate 28.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. United Airlines Holdings
Performance |
| Timeline |
| LPKF Laser Electronics |
| United Airlines Holdings |
LPKF Laser and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and United Airlines
The main advantage of trading using opposite LPKF Laser and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Hyundai Motor | LPKF Laser vs. Toyota Motor Corp |
| United Airlines vs. Public Storage | United Airlines vs. Ion Beam Applications | United Airlines vs. Ally Financial | United Airlines vs. Bank of Ireland |
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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