Correlation Between LPKF Laser and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan, you can compare the effects of market volatilities on LPKF Laser and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Freeport McMoRan.
Diversification Opportunities for LPKF Laser and Freeport McMoRan
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Freeport is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of LPKF Laser i.e., LPKF Laser and Freeport McMoRan go up and down completely randomly.
Pair Corralation between LPKF Laser and Freeport McMoRan
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.64 times more return on investment than Freeport McMoRan. However, LPKF Laser Electronics is 1.55 times less risky than Freeport McMoRan. It trades about -0.12 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.16 per unit of risk. If you would invest 887.00 in LPKF Laser Electronics on November 5, 2024 and sell it today you would lose (30.00) from holding LPKF Laser Electronics or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Freeport McMoRan
Performance |
| Timeline |
| LPKF Laser Electronics |
| Freeport McMoRan |
LPKF Laser and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Freeport McMoRan
The main advantage of trading using opposite LPKF Laser and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| LPKF Laser vs. Ebro Foods | LPKF Laser vs. Bell Food Group | LPKF Laser vs. Associated British Foods | LPKF Laser vs. Young Cos Brewery |
| Freeport McMoRan vs. AMG Advanced Metallurgical | Freeport McMoRan vs. GreenX Metals | Freeport McMoRan vs. Synthomer plc | Freeport McMoRan vs. Cairn Homes PLC |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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