Correlation Between LPKF Laser and Auto Trader
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on LPKF Laser and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Auto Trader.
Diversification Opportunities for LPKF Laser and Auto Trader
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LPKF and Auto is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of LPKF Laser i.e., LPKF Laser and Auto Trader go up and down completely randomly.
Pair Corralation between LPKF Laser and Auto Trader
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Auto Trader. In addition to that, LPKF Laser is 1.46 times more volatile than Auto Trader Group. It trades about -0.04 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.1 per unit of volatility. If you would invest 78,074 in Auto Trader Group on October 22, 2024 and sell it today you would earn a total of 1,286 from holding Auto Trader Group or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Auto Trader Group
Performance |
| Timeline |
| LPKF Laser Electronics |
| Auto Trader Group |
LPKF Laser and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Auto Trader
The main advantage of trading using opposite LPKF Laser and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| LPKF Laser vs. Grieg Seafood | LPKF Laser vs. Sligro Food Group | LPKF Laser vs. Compagnie Plastic Omnium | LPKF Laser vs. Austevoll Seafood ASA |
| Auto Trader vs. LPKF Laser Electronics | Auto Trader vs. Zoom Video Communications | Auto Trader vs. Costco Wholesale Corp | Auto Trader vs. Samsung Electronics Co |
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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