Correlation Between LPKF Laser and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Baker Hughes 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 Baker Hughes 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 Baker Hughes Co, you can compare the effects of market volatilities on LPKF Laser and Baker Hughes 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 Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Baker Hughes.
Diversification Opportunities for LPKF Laser and Baker Hughes
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Baker is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of LPKF Laser i.e., LPKF Laser and Baker Hughes go up and down completely randomly.
Pair Corralation between LPKF Laser and Baker Hughes
Assuming the 90 days trading horizon LPKF Laser is expected to generate 4.12 times less return on investment than Baker Hughes. In addition to that, LPKF Laser is 1.24 times more volatile than Baker Hughes Co. It trades about 0.01 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.05 per unit of volatility. If you would invest 3,342 in Baker Hughes Co on September 12, 2024 and sell it today you would earn a total of 799.00 from holding Baker Hughes Co or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.44% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Baker Hughes Co
Performance |
| Timeline |
| LPKF Laser Electronics |
| Baker Hughes |
LPKF Laser and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Baker Hughes
The main advantage of trading using opposite LPKF Laser and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| LPKF Laser vs. Hong Kong Land | LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Fidelity Sustainable USD |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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