Correlation Between Iridium Communications and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and LPKF Laser Electronics, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and LPKF Laser.
Diversification Opportunities for Iridium Communications and LPKF Laser
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iridium and LPKF is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications 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 Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and LPKF Laser go up and down completely randomly.
Pair Corralation between Iridium Communications and LPKF Laser
Assuming the 90 days horizon Iridium Communications is expected to generate 2.83 times more return on investment than LPKF Laser. However, Iridium Communications is 2.83 times more volatile than LPKF Laser Electronics. It trades about 0.1 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.02 per unit of risk. If you would invest 2,677 in Iridium Communications on September 4, 2024 and sell it today you would earn a total of 133.00 from holding Iridium Communications or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Iridium Communications vs. LPKF Laser Electronics
Performance |
| Timeline |
| Iridium Communications |
| LPKF Laser Electronics |
Iridium Communications and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and LPKF Laser
The main advantage of trading using opposite Iridium Communications and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. T Mobile | Iridium Communications vs. China Mobile Limited | Iridium Communications vs. ATT Inc | Iridium Communications vs. Nippon Telegraph and |
| LPKF Laser vs. VIRG NATL BANKSH | LPKF Laser vs. WT OFFSHORE | LPKF Laser vs. Japan Tobacco | LPKF Laser vs. JAPAN TOBACCO UNSPADR12 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |