Correlation Between LPKF Laser and Allianz Technology
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Allianz Technology 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 Allianz Technology 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 Allianz Technology Trust, you can compare the effects of market volatilities on LPKF Laser and Allianz Technology 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 Allianz Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Allianz Technology.
Diversification Opportunities for LPKF Laser and Allianz Technology
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LPKF and Allianz is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Allianz Technology Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz Technology Trust 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 Allianz Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz Technology Trust has no effect on the direction of LPKF Laser i.e., LPKF Laser and Allianz Technology go up and down completely randomly.
Pair Corralation between LPKF Laser and Allianz Technology
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Allianz Technology. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.51 times less risky than Allianz Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Allianz Technology Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 36,600 in Allianz Technology Trust on September 2, 2024 and sell it today you would earn a total of 3,150 from holding Allianz Technology Trust or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Allianz Technology Trust
Performance |
| Timeline |
| LPKF Laser Electronics |
| Allianz Technology Trust |
LPKF Laser and Allianz Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Allianz Technology
The main advantage of trading using opposite LPKF Laser and Allianz Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Allianz Technology 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 Allianz Technology will offset losses from the drop in Allianz Technology's long position.| LPKF Laser vs. Uniper SE | LPKF Laser vs. Mulberry Group PLC | LPKF Laser vs. London Security Plc | LPKF Laser vs. Triad Group PLC |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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