Correlation Between LPKF Laser and Bisichi Mining
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Bisichi Mining 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 Bisichi Mining 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 Bisichi Mining PLC, you can compare the effects of market volatilities on LPKF Laser and Bisichi Mining 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 Bisichi Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Bisichi Mining.
Diversification Opportunities for LPKF Laser and Bisichi Mining
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LPKF and Bisichi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Bisichi Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisichi Mining PLC 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 Bisichi Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisichi Mining PLC has no effect on the direction of LPKF Laser i.e., LPKF Laser and Bisichi Mining go up and down completely randomly.
Pair Corralation between LPKF Laser and Bisichi Mining
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.33 times more return on investment than Bisichi Mining. However, LPKF Laser Electronics is 3.03 times less risky than Bisichi Mining. It trades about -0.11 of its potential returns per unit of risk. Bisichi Mining PLC is currently generating about -0.09 per unit of risk. If you would invest 878.00 in LPKF Laser Electronics on August 31, 2024 and sell it today you would lose (15.00) from holding LPKF Laser Electronics or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Bisichi Mining PLC
Performance |
| Timeline |
| LPKF Laser Electronics |
| Bisichi Mining PLC |
LPKF Laser and Bisichi Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Bisichi Mining
The main advantage of trading using opposite LPKF Laser and Bisichi Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Bisichi Mining 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 Bisichi Mining will offset losses from the drop in Bisichi Mining's long position.| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser vs. JLEN Environmental Assets |
| Bisichi Mining vs. Zoom Video Communications | Bisichi Mining vs. Enbridge | Bisichi Mining vs. Coor Service Management | Bisichi Mining vs. Surgical Science Sweden |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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