Correlation Between LPKF Laser and Eagle Eye
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Eagle Eye 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 Eagle Eye 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 Eagle Eye Solutions, you can compare the effects of market volatilities on LPKF Laser and Eagle Eye 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 Eagle Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Eagle Eye.
Diversification Opportunities for LPKF Laser and Eagle Eye
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Eagle is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Eagle Eye Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Eye Solutions 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 Eagle Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Eye Solutions has no effect on the direction of LPKF Laser i.e., LPKF Laser and Eagle Eye go up and down completely randomly.
Pair Corralation between LPKF Laser and Eagle Eye
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.24 times more return on investment than Eagle Eye. However, LPKF Laser Electronics is 4.1 times less risky than Eagle Eye. It trades about -0.04 of its potential returns per unit of risk. Eagle Eye Solutions is currently generating about -0.21 per unit of risk. If you would invest 924.00 in LPKF Laser Electronics on October 24, 2024 and sell it today you would lose (11.00) from holding LPKF Laser Electronics or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Eagle Eye Solutions
Performance |
| Timeline |
| LPKF Laser Electronics |
| Eagle Eye Solutions |
LPKF Laser and Eagle Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Eagle Eye
The main advantage of trading using opposite LPKF Laser and Eagle Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Eagle Eye 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 Eagle Eye will offset losses from the drop in Eagle Eye's long position.| LPKF Laser vs. Broadridge Financial Solutions | LPKF Laser vs. Sparebank 1 SR | LPKF Laser vs. Berner Kantonalbank AG | LPKF Laser vs. Trainline Plc |
| Eagle Eye vs. Monster Beverage Corp | Eagle Eye vs. Polar Capital Technology | Eagle Eye vs. Electronic Arts | Eagle Eye vs. LPKF Laser Electronics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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