Correlation Between LPKF Laser and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and International Biotechnology 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 International Biotechnology 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 International Biotechnology Trust, you can compare the effects of market volatilities on LPKF Laser and International Biotechnology 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 International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and International Biotechnology.
Diversification Opportunities for LPKF Laser and International Biotechnology
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between LPKF and International is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology 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 International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of LPKF Laser i.e., LPKF Laser and International Biotechnology go up and down completely randomly.
Pair Corralation between LPKF Laser and International Biotechnology
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the International Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.32 times less risky than International Biotechnology. The stock trades about -0.15 of its potential returns per unit of risk. The International Biotechnology Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 67,800 in International Biotechnology Trust on August 25, 2024 and sell it today you would earn a total of 800.00 from holding International Biotechnology Trust or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LPKF Laser Electronics vs. International Biotechnology Tr
Performance |
| Timeline |
| LPKF Laser Electronics |
| International Biotechnology |
LPKF Laser and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and International Biotechnology
The main advantage of trading using opposite LPKF Laser and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Hyundai Motor | LPKF Laser vs. Toyota Motor Corp |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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