Correlation Between National Beverage and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and LPKF Laser Electronics, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and LPKF Laser.
Diversification Opportunities for National Beverage and LPKF Laser
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and LPKF is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and LPKF Laser go up and down completely randomly.
Pair Corralation between National Beverage and LPKF Laser
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.18 times less risky than LPKF Laser. The stock trades about -0.23 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 874.00 in LPKF Laser Electronics on October 14, 2024 and sell it today you would earn a total of 52.00 from holding LPKF Laser Electronics or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. LPKF Laser Electronics
Performance |
| Timeline |
| National Beverage Corp |
| LPKF Laser Electronics |
National Beverage and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and LPKF Laser
The main advantage of trading using opposite National Beverage and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. GBS Software AG | National Beverage vs. ACCSYS TECHPLC EO | National Beverage vs. BioNTech SE | National Beverage vs. Take Two Interactive Software |
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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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