Correlation Between LPKF Laser and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Rockfire Resources 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 Rockfire Resources 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 Rockfire Resources plc, you can compare the effects of market volatilities on LPKF Laser and Rockfire Resources 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 Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Rockfire Resources.
Diversification Opportunities for LPKF Laser and Rockfire Resources
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPKF and Rockfire is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources 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 Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of LPKF Laser i.e., LPKF Laser and Rockfire Resources go up and down completely randomly.
Pair Corralation between LPKF Laser and Rockfire Resources
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to generate 0.31 times more return on investment than Rockfire Resources. However, LPKF Laser Electronics is 3.23 times less risky than Rockfire Resources. It trades about 0.04 of its potential returns per unit of risk. Rockfire Resources plc is currently generating about -0.05 per unit of risk. If you would invest 796.00 in LPKF Laser Electronics on September 3, 2024 and sell it today you would earn a total of 64.00 from holding LPKF Laser Electronics or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Rockfire Resources plc
Performance |
| Timeline |
| LPKF Laser Electronics |
| Rockfire Resources plc |
LPKF Laser and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Rockfire Resources
The main advantage of trading using opposite LPKF Laser and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Rockfire Resources 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 Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| LPKF Laser vs. Catalyst Media Group | LPKF Laser vs. CATLIN GROUP | LPKF Laser vs. Magnora ASA | LPKF Laser vs. RTW Venture Fund |
| Rockfire Resources vs. LPKF Laser Electronics | Rockfire Resources vs. Fevertree Drinks Plc | Rockfire Resources vs. Spirent Communications plc | Rockfire Resources vs. Zegona Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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