Correlation Between LPKF Laser and GoldMining
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on LPKF Laser and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and GoldMining.
Diversification Opportunities for LPKF Laser and GoldMining
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and GoldMining is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of LPKF Laser i.e., LPKF Laser and GoldMining go up and down completely randomly.
Pair Corralation between LPKF Laser and GoldMining
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 1.17 times less risky than GoldMining. The stock trades about -0.12 of its potential returns per unit of risk. The GoldMining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 117.00 in GoldMining on November 7, 2024 and sell it today you would earn a total of 1.00 from holding GoldMining or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.67% |
| Values | Daily Returns |
LPKF Laser Electronics vs. GoldMining
Performance |
| Timeline |
| LPKF Laser Electronics |
| GoldMining |
LPKF Laser and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and GoldMining
The main advantage of trading using opposite LPKF Laser and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| LPKF Laser vs. Telecom Italia SpA | LPKF Laser vs. Empire Metals Limited | LPKF Laser vs. Europa Metals | LPKF Laser vs. Spirent Communications plc |
| GoldMining vs. Sligro Food Group | GoldMining vs. Synchrony Financial | GoldMining vs. Sabre Insurance Group | GoldMining vs. TBC Bank Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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