Correlation Between LPKF Laser and PureTech Health
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and PureTech Health 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 PureTech Health 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 PureTech Health plc, you can compare the effects of market volatilities on LPKF Laser and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and PureTech Health.
Diversification Opportunities for LPKF Laser and PureTech Health
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and PureTech is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of LPKF Laser i.e., LPKF Laser and PureTech Health go up and down completely randomly.
Pair Corralation between LPKF Laser and PureTech Health
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.84 times more return on investment than PureTech Health. However, LPKF Laser Electronics is 1.19 times less risky than PureTech Health. It trades about -0.01 of its potential returns per unit of risk. PureTech Health plc is currently generating about -0.04 per unit of risk. If you would invest 1,218 in LPKF Laser Electronics on October 12, 2024 and sell it today you would lose (287.00) from holding LPKF Laser Electronics or give up 23.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. PureTech Health plc
Performance |
| Timeline |
| LPKF Laser Electronics |
| PureTech Health plc |
LPKF Laser and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and PureTech Health
The main advantage of trading using opposite LPKF Laser and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| LPKF Laser vs. Zurich Insurance Group | LPKF Laser vs. Manulife Financial Corp | LPKF Laser vs. Zoom Video Communications | LPKF Laser vs. FinecoBank SpA |
| PureTech Health vs. Trainline Plc | PureTech Health vs. Tavistock Investments Plc | PureTech Health vs. LPKF Laser Electronics | PureTech Health vs. Monks Investment Trust |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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