Correlation Between Abingdon Health and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Abingdon Health 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 Abingdon Health and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abingdon Health Plc and LPKF Laser Electronics, you can compare the effects of market volatilities on Abingdon Health 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 Abingdon Health with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and LPKF Laser.
Diversification Opportunities for Abingdon Health and LPKF Laser
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Abingdon and LPKF is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc 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 Abingdon Health 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 Abingdon Health Plc 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 Abingdon Health i.e., Abingdon Health and LPKF Laser go up and down completely randomly.
Pair Corralation between Abingdon Health and LPKF Laser
Assuming the 90 days trading horizon Abingdon Health Plc is expected to under-perform the LPKF Laser. In addition to that, Abingdon Health is 3.37 times more volatile than LPKF Laser Electronics. It trades about -0.21 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.06 per unit of volatility. If you would invest 868.00 in LPKF Laser Electronics on September 2, 2024 and sell it today you would lose (8.00) from holding LPKF Laser Electronics or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. LPKF Laser Electronics
Performance |
| Timeline |
| Abingdon Health Plc |
| LPKF Laser Electronics |
Abingdon Health and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and LPKF Laser
The main advantage of trading using opposite Abingdon Health and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health 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.| Abingdon Health vs. McEwen Mining | Abingdon Health vs. Dentsply Sirona | Abingdon Health vs. Baker Steel Resources | Abingdon Health vs. Blackrock World Mining |
| LPKF Laser vs. Uniper SE | LPKF Laser vs. Mulberry Group PLC | LPKF Laser vs. London Security Plc | LPKF Laser vs. Triad Group PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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