Correlation Between LPKF Laser and Gaztransport
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on LPKF Laser and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Gaztransport.
Diversification Opportunities for LPKF Laser and Gaztransport
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and Gaztransport is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of LPKF Laser i.e., LPKF Laser and Gaztransport go up and down completely randomly.
Pair Corralation between LPKF Laser and Gaztransport
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 1.96 times more return on investment than Gaztransport. However, LPKF Laser is 1.96 times more volatile than Gaztransport et Technigaz. It trades about 0.04 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about -0.11 per unit of risk. If you would invest 851.00 in LPKF Laser Electronics on September 19, 2024 and sell it today you would earn a total of 14.00 from holding LPKF Laser Electronics or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Gaztransport et Technigaz
Performance |
| Timeline |
| LPKF Laser Electronics |
| Gaztransport et Technigaz |
LPKF Laser and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Gaztransport
The main advantage of trading using opposite LPKF Laser and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| LPKF Laser vs. Datagroup SE | LPKF Laser vs. Public Storage | LPKF Laser vs. Alliance Data Systems | LPKF Laser vs. Samsung Electronics Co |
| Gaztransport vs. Cars Inc | Gaztransport vs. Air Products Chemicals | Gaztransport vs. Systemair AB | Gaztransport vs. Fair Oaks Income |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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