Correlation Between FinecoBank SpA and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both FinecoBank SpA and LPKF Laser 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 FinecoBank SpA and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FinecoBank SpA and LPKF Laser Electronics, you can compare the effects of market volatilities on FinecoBank SpA and LPKF Laser 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 FinecoBank SpA with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinecoBank SpA and LPKF Laser.
Diversification Opportunities for FinecoBank SpA and LPKF Laser
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FinecoBank and LPKF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding FinecoBank SpA and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and FinecoBank SpA 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 FinecoBank SpA are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of FinecoBank SpA i.e., FinecoBank SpA and LPKF Laser go up and down completely randomly.
Pair Corralation between FinecoBank SpA and LPKF Laser
Assuming the 90 days trading horizon FinecoBank SpA is expected to generate 2.74 times less return on investment than LPKF Laser. But when comparing it to its historical volatility, FinecoBank SpA is 2.56 times less risky than LPKF Laser. It trades about 0.28 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 815.00 in LPKF Laser Electronics on October 12, 2024 and sell it today you would earn a total of 116.00 from holding LPKF Laser Electronics or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FinecoBank SpA vs. LPKF Laser Electronics
Performance |
| Timeline |
| FinecoBank SpA |
| LPKF Laser Electronics |
FinecoBank SpA and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FinecoBank SpA and LPKF Laser
The main advantage of trading using opposite FinecoBank SpA and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinecoBank SpA position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| FinecoBank SpA vs. Datagroup SE | FinecoBank SpA vs. Amedeo Air Four | FinecoBank SpA vs. Infrastrutture Wireless Italiane | FinecoBank SpA vs. Ion Beam Applications |
| LPKF Laser vs. Zurich Insurance Group | LPKF Laser vs. Manulife Financial Corp | LPKF Laser vs. Zoom Video Communications | LPKF Laser vs. FinecoBank SpA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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