Correlation Between LPKF Laser and BW Offshore
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and BW Offshore 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 BW Offshore 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 BW Offshore, you can compare the effects of market volatilities on LPKF Laser and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and BW Offshore.
Diversification Opportunities for LPKF Laser and BW Offshore
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and 0RKH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of LPKF Laser i.e., LPKF Laser and BW Offshore go up and down completely randomly.
Pair Corralation between LPKF Laser and BW Offshore
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 1.16 times more return on investment than BW Offshore. However, LPKF Laser is 1.16 times more volatile than BW Offshore. It trades about -0.06 of its potential returns per unit of risk. BW Offshore is currently generating about -0.15 per unit of risk. If you would invest 853.00 in LPKF Laser Electronics on January 14, 2025 and sell it today you would lose (38.00) from holding LPKF Laser Electronics or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. BW Offshore
Performance |
| Timeline |
| LPKF Laser Electronics |
| BW Offshore |
LPKF Laser and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and BW Offshore
The main advantage of trading using opposite LPKF Laser and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| LPKF Laser vs. First Majestic Silver | LPKF Laser vs. GoldMining | LPKF Laser vs. Invesco Physical Silver | LPKF Laser vs. Fortuna Silver Mines |
| BW Offshore vs. Tavistock Investments Plc | BW Offshore vs. Caledonia Mining | BW Offshore vs. Livermore Investments Group | BW Offshore vs. Atalaya Mining |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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