Correlation Between LPKF Laser and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on LPKF Laser and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and DFS Furniture.
Diversification Opportunities for LPKF Laser and DFS Furniture
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LPKF and DFS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of LPKF Laser i.e., LPKF Laser and DFS Furniture go up and down completely randomly.
Pair Corralation between LPKF Laser and DFS Furniture
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 1.05 times more return on investment than DFS Furniture. However, LPKF Laser is 1.05 times more volatile than DFS Furniture PLC. It trades about 0.1 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.06 per unit of risk. If you would invest 873.00 in LPKF Laser Electronics on October 12, 2024 and sell it today you would earn a total of 62.00 from holding LPKF Laser Electronics or generate 7.1% 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. DFS Furniture PLC
Performance |
| Timeline |
| LPKF Laser Electronics |
| DFS Furniture PLC |
LPKF Laser and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and DFS Furniture
The main advantage of trading using opposite LPKF Laser and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| LPKF Laser vs. Zurich Insurance Group | LPKF Laser vs. Manulife Financial Corp | LPKF Laser vs. Zoom Video Communications | LPKF Laser vs. FinecoBank SpA |
| DFS Furniture vs. Batm Advanced Communications | DFS Furniture vs. Ecclesiastical Insurance Office | DFS Furniture vs. LPKF Laser Electronics | DFS Furniture vs. Bankers Investment Trust |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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