Correlation Between LPKF Laser and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and JLEN Environmental 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 JLEN Environmental 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 JLEN Environmental Assets, you can compare the effects of market volatilities on LPKF Laser and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and JLEN Environmental.
Diversification Opportunities for LPKF Laser and JLEN Environmental
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and JLEN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of LPKF Laser i.e., LPKF Laser and JLEN Environmental go up and down completely randomly.
Pair Corralation between LPKF Laser and JLEN Environmental
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 1.0 times more return on investment than JLEN Environmental. However, LPKF Laser Electronics is 1.0 times less risky than JLEN Environmental. It trades about -0.07 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.26 per unit of risk. If you would invest 871.00 in LPKF Laser Electronics on September 12, 2024 and sell it today you would lose (56.00) from holding LPKF Laser Electronics or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.31% |
| Values | Daily Returns |
LPKF Laser Electronics vs. JLEN Environmental Assets
Performance |
| Timeline |
| LPKF Laser Electronics |
| JLEN Environmental Assets |
LPKF Laser and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and JLEN Environmental
The main advantage of trading using opposite LPKF Laser and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| LPKF Laser vs. Monks Investment Trust | LPKF Laser vs. Electronic Arts | LPKF Laser vs. Smithson Investment Trust | LPKF Laser vs. The Mercantile Investment |
| JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Hyundai Motor | JLEN Environmental 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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