Correlation Between LPKF Laser and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Ebro Foods 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 Ebro Foods 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 Ebro Foods, you can compare the effects of market volatilities on LPKF Laser and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Ebro Foods.
Diversification Opportunities for LPKF Laser and Ebro Foods
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LPKF and Ebro is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of LPKF Laser i.e., LPKF Laser and Ebro Foods go up and down completely randomly.
Pair Corralation between LPKF Laser and Ebro Foods
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 2.19 times more return on investment than Ebro Foods. However, LPKF Laser is 2.19 times more volatile than Ebro Foods. It trades about 0.03 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.02 per unit of risk. If you would invest 819.00 in LPKF Laser Electronics on August 31, 2024 and sell it today you would earn a total of 41.00 from holding LPKF Laser Electronics or generate 5.01% 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. Ebro Foods
Performance |
| Timeline |
| LPKF Laser Electronics |
| Ebro Foods |
LPKF Laser and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Ebro Foods
The main advantage of trading using opposite LPKF Laser and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser vs. JLEN Environmental Assets |
| Ebro Foods vs. Monks Investment Trust | Ebro Foods vs. Fortune Brands Home | Ebro Foods vs. Oakley Capital Investments | Ebro Foods vs. bet at home AG |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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