Correlation Between DXC Technology and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both DXC Technology 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 DXC Technology and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and LPKF Laser Electronics, you can compare the effects of market volatilities on DXC Technology 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 DXC Technology with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and LPKF Laser.
Diversification Opportunities for DXC Technology and LPKF Laser
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DXC and LPKF is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co 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 DXC Technology 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 DXC Technology Co 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 DXC Technology i.e., DXC Technology and LPKF Laser go up and down completely randomly.
Pair Corralation between DXC Technology and LPKF Laser
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.55 times less risky than LPKF Laser. The stock trades about -0.26 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 901.00 in LPKF Laser Electronics on November 28, 2024 and sell it today you would lose (31.00) from holding LPKF Laser Electronics or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DXC Technology Co vs. LPKF Laser Electronics
Performance |
| Timeline |
| DXC Technology |
| LPKF Laser Electronics |
DXC Technology and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and LPKF Laser
The main advantage of trading using opposite DXC Technology and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology 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.| DXC Technology vs. SLIGRO FOOD GROUP | DXC Technology vs. SENECA FOODS A | DXC Technology vs. Retail Estates NV | DXC Technology vs. Caseys General Stores |
| LPKF Laser vs. Diamyd Medical AB | LPKF Laser vs. ONWARD MEDICAL BV | LPKF Laser vs. MEDICAL FACILITIES NEW | LPKF Laser vs. SPARTAN STORES |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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