Correlation Between TRAINLINE PLC and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and LPKF Laser Electronics, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and LPKF Laser.
Diversification Opportunities for TRAINLINE PLC and LPKF Laser
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TRAINLINE and LPKF is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS 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 TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and LPKF Laser go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and LPKF Laser
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 0.31 times more return on investment than LPKF Laser. However, TRAINLINE PLC LS is 3.25 times less risky than LPKF Laser. It trades about 0.1 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.03 per unit of risk. If you would invest 490.00 in TRAINLINE PLC LS on September 13, 2024 and sell it today you would earn a total of 15.00 from holding TRAINLINE PLC LS or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. LPKF Laser Electronics
Performance |
| Timeline |
| TRAINLINE PLC LS |
| LPKF Laser Electronics |
TRAINLINE PLC and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and LPKF Laser
The main advantage of trading using opposite TRAINLINE PLC and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. TRAVEL LEISURE DL 01 | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. Superior Plus Corp | TRAINLINE PLC vs. SIVERS SEMICONDUCTORS AB |
| LPKF Laser vs. Schneider Electric SE | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. SIVERS SEMICONDUCTORS AB | LPKF Laser vs. Norsk Hydro ASA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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