Correlation Between LPKF Laser and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on LPKF Laser and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Mercantile Investment.
Diversification Opportunities for LPKF Laser and Mercantile Investment
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Mercantile is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of LPKF Laser i.e., LPKF Laser and Mercantile Investment go up and down completely randomly.
Pair Corralation between LPKF Laser and Mercantile Investment
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 2.5 times more return on investment than Mercantile Investment. However, LPKF Laser is 2.5 times more volatile than The Mercantile Investment. It trades about 0.03 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.03 per unit of risk. If you would invest 905.00 in LPKF Laser Electronics on November 27, 2024 and sell it today you would earn a total of 8.00 from holding LPKF Laser Electronics or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. The Mercantile Investment
Performance |
| Timeline |
| LPKF Laser Electronics |
| The Mercantile Investment |
LPKF Laser and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Mercantile Investment
The main advantage of trading using opposite LPKF Laser and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| LPKF Laser vs. Global Net Lease | LPKF Laser vs. Compagnie Plastic Omnium | LPKF Laser vs. Vulcan Materials Co | LPKF Laser vs. Chrysalis Investments |
| Mercantile Investment vs. Coeur Mining | Mercantile Investment vs. Eastinco Mining Exploration | Mercantile Investment vs. GreenX Metals | Mercantile Investment vs. Fulcrum Metals PLC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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