Correlation Between AIR PRODCHEMICALS and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and LPKF Laser Electronics, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and LPKF Laser.
Diversification Opportunities for AIR PRODCHEMICALS and LPKF Laser
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AIR and LPKF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and LPKF Laser go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and LPKF Laser
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.86 times more return on investment than LPKF Laser. However, AIR PRODCHEMICALS is 1.17 times less risky than LPKF Laser. It trades about 0.12 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.04 per unit of risk. If you would invest 24,528 in AIR PRODCHEMICALS on September 3, 2024 and sell it today you would earn a total of 7,102 from holding AIR PRODCHEMICALS or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. LPKF Laser Electronics
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| LPKF Laser Electronics |
AIR PRODCHEMICALS and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and LPKF Laser
The main advantage of trading using opposite AIR PRODCHEMICALS and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. Tsingtao Brewery | AIR PRODCHEMICALS vs. Broadwind | AIR PRODCHEMICALS vs. National Beverage Corp | AIR PRODCHEMICALS vs. United Breweries Co |
| LPKF Laser vs. IDP EDUCATION LTD | LPKF Laser vs. EMBARK EDUCATION LTD | LPKF Laser vs. CAREER EDUCATION | LPKF Laser vs. Adtalem Global Education |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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