Correlation Between LPKF Laser and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced Materials, you can compare the effects of market volatilities on LPKF Laser and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Morgan Advanced.
Diversification Opportunities for LPKF Laser and Morgan Advanced
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Morgan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of LPKF Laser i.e., LPKF Laser and Morgan Advanced go up and down completely randomly.
Pair Corralation between LPKF Laser and Morgan Advanced
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Morgan Advanced. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 1.63 times less risky than Morgan Advanced. The stock trades about -0.15 of its potential returns per unit of risk. The Morgan Advanced Materials is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 24,150 in Morgan Advanced Materials on September 1, 2024 and sell it today you would earn a total of 2,400 from holding Morgan Advanced Materials or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Morgan Advanced Materials
Performance |
| Timeline |
| LPKF Laser Electronics |
| Morgan Advanced Materials |
LPKF Laser and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Morgan Advanced
The main advantage of trading using opposite LPKF Laser and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| LPKF Laser vs. Coor Service Management | LPKF Laser vs. Empire Metals Limited | LPKF Laser vs. Adriatic Metals | LPKF Laser vs. Golden Metal Resources |
| Morgan Advanced vs. Endeavour Mining Corp | Morgan Advanced vs. Bloomsbury Publishing Plc | Morgan Advanced vs. LPKF Laser Electronics | Morgan Advanced vs. Coeur Mining |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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