Correlation Between Science Applications and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and LPKF Laser Electronics, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and LPKF Laser.
Diversification Opportunities for Science Applications and LPKF Laser
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Science and LPKF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati 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 Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and LPKF Laser go up and down completely randomly.
Pair Corralation between Science Applications and LPKF Laser
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, Science Applications International is 1.25 times less risky than LPKF Laser. The stock trades about -0.3 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 849.00 in LPKF Laser Electronics on September 14, 2024 and sell it today you would lose (47.00) from holding LPKF Laser Electronics or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. LPKF Laser Electronics
Performance |
| Timeline |
| Science Applications |
| LPKF Laser Electronics |
Science Applications and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and LPKF Laser
The main advantage of trading using opposite Science Applications and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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