Correlation Between LPKF Laser and Norman Broadbent
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Norman Broadbent 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 Norman Broadbent 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 Norman Broadbent Plc, you can compare the effects of market volatilities on LPKF Laser and Norman Broadbent 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 Norman Broadbent. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Norman Broadbent.
Diversification Opportunities for LPKF Laser and Norman Broadbent
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and Norman is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Norman Broadbent Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norman Broadbent Plc 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 Norman Broadbent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norman Broadbent Plc has no effect on the direction of LPKF Laser i.e., LPKF Laser and Norman Broadbent go up and down completely randomly.
Pair Corralation between LPKF Laser and Norman Broadbent
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Norman Broadbent. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.06 times less risky than Norman Broadbent. The stock trades about -0.04 of its potential returns per unit of risk. The Norman Broadbent Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 325.00 in Norman Broadbent Plc on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Norman Broadbent Plc or generate 0.0% 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. Norman Broadbent Plc
Performance |
| Timeline |
| LPKF Laser Electronics |
| Norman Broadbent Plc |
LPKF Laser and Norman Broadbent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Norman Broadbent
The main advantage of trading using opposite LPKF Laser and Norman Broadbent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Norman Broadbent 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 Norman Broadbent will offset losses from the drop in Norman Broadbent's long position.| LPKF Laser vs. National Beverage Corp | LPKF Laser vs. Monks Investment Trust | LPKF Laser vs. Austevoll Seafood ASA | LPKF Laser vs. International Consolidated Airlines |
| Norman Broadbent vs. Silver Bullet Data | Norman Broadbent vs. Home Depot | Norman Broadbent vs. Synthomer plc | Norman Broadbent vs. Invesco Physical Silver |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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