Correlation Between LPKF Laser and Reliance Industries
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Reliance Industries 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 Reliance Industries 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 Reliance Industries Ltd, you can compare the effects of market volatilities on LPKF Laser and Reliance Industries 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 Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Reliance Industries.
Diversification Opportunities for LPKF Laser and Reliance Industries
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LPKF and Reliance is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries 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 Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of LPKF Laser i.e., LPKF Laser and Reliance Industries go up and down completely randomly.
Pair Corralation between LPKF Laser and Reliance Industries
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 1.59 times more return on investment than Reliance Industries. However, LPKF Laser is 1.59 times more volatile than Reliance Industries Ltd. It trades about 0.07 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.03 per unit of risk. If you would invest 873.00 in LPKF Laser Electronics on October 11, 2024 and sell it today you would earn a total of 42.00 from holding LPKF Laser Electronics or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Reliance Industries Ltd
Performance |
| Timeline |
| LPKF Laser Electronics |
| Reliance Industries |
LPKF Laser and Reliance Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Reliance Industries
The main advantage of trading using opposite LPKF Laser and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Reliance Industries 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 Reliance Industries will offset losses from the drop in Reliance Industries' long position.| LPKF Laser vs. Lindsell Train Investment | LPKF Laser vs. Caledonia Investments | LPKF Laser vs. Mineral Financial Investments | LPKF Laser vs. Air Products Chemicals |
| Reliance Industries vs. Sunny Optical Technology | Reliance Industries vs. Spotify Technology SA | Reliance Industries vs. Allianz Technology Trust | Reliance Industries vs. Synthomer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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