Correlation Between Berkshire Hathaway and LPKF Laser

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Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and LPKF Laser Electronics, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and LPKF Laser.

Diversification Opportunities for Berkshire Hathaway and LPKF Laser

BerkshireLPKFDiversified AwayBerkshireLPKFDiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Berkshire and LPKF is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway i.e., Berkshire Hathaway and LPKF Laser go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and LPKF Laser

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.64 times more return on investment than LPKF Laser. However, Berkshire Hathaway is 1.57 times less risky than LPKF Laser. It trades about 0.07 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.0 per unit of risk. If you would invest  38,575  in Berkshire Hathaway on November 26, 2024 and sell it today you would earn a total of  9,650  from holding Berkshire Hathaway or generate 25.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Berkshire Hathaway  vs.  LPKF Laser Electronics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.150R37 0ND2
       Timeline  
Berkshire Hathaway 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb440450460470480490
LPKF Laser Electronics 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LPKF Laser is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb88.28.48.68.899.29.4

Berkshire Hathaway and LPKF Laser Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.75-2.81-1.87-0.920.00.931.892.853.814.77 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.150R37 0ND2
       Returns  

Pair Trading with Berkshire Hathaway and LPKF Laser

The main advantage of trading using opposite Berkshire Hathaway and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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.
The idea behind Berkshire Hathaway and LPKF Laser Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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