Correlation Between LPKF Laser and 88 Energy
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and 88 Energy 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 88 Energy 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 88 Energy, you can compare the effects of market volatilities on LPKF Laser and 88 Energy 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 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and 88 Energy.
Diversification Opportunities for LPKF Laser and 88 Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and 88E is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy 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 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of LPKF Laser i.e., LPKF Laser and 88 Energy go up and down completely randomly.
Pair Corralation between LPKF Laser and 88 Energy
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.39 times more return on investment than 88 Energy. However, LPKF Laser Electronics is 2.55 times less risky than 88 Energy. It trades about 0.03 of its potential returns per unit of risk. 88 Energy is currently generating about -0.06 per unit of risk. If you would invest 791.00 in LPKF Laser Electronics on November 28, 2024 and sell it today you would earn a total of 90.00 from holding LPKF Laser Electronics or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. 88 Energy
Performance |
| Timeline |
| LPKF Laser Electronics |
| 88 Energy |
LPKF Laser and 88 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and 88 Energy
The main advantage of trading using opposite LPKF Laser and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, 88 Energy 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 88 Energy will offset losses from the drop in 88 Energy's long position.| LPKF Laser vs. National Beverage Corp | LPKF Laser vs. Monks Investment Trust | LPKF Laser vs. Austevoll Seafood ASA | LPKF Laser vs. International Consolidated Airlines |
| 88 Energy vs. Associated British Foods | 88 Energy vs. Check Point Software | 88 Energy vs. Premier Foods PLC | 88 Energy vs. Vitec Software 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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