Correlation Between Cairn Homes and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and LPKF Laser Electronics, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and LPKF Laser.
Diversification Opportunities for Cairn Homes and LPKF Laser
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cairn and LPKF is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes 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 Cairn Homes 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 Cairn Homes 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 Cairn Homes i.e., Cairn Homes and LPKF Laser go up and down completely randomly.
Pair Corralation between Cairn Homes and LPKF Laser
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.4 times more return on investment than LPKF Laser. However, Cairn Homes is 1.4 times more volatile than LPKF Laser Electronics. It trades about -0.04 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.16 per unit of risk. If you would invest 19,380 in Cairn Homes PLC on November 3, 2024 and sell it today you would lose (380.00) from holding Cairn Homes PLC or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. LPKF Laser Electronics
Performance |
| Timeline |
| Cairn Homes PLC |
| LPKF Laser Electronics |
Cairn Homes and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and LPKF Laser
The main advantage of trading using opposite Cairn Homes and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Rightmove PLC | Cairn Homes vs. Bioventix | Cairn Homes vs. Games Workshop Group | Cairn Homes vs. Auto Trader Group |
| LPKF Laser vs. Science in Sport | LPKF Laser vs. Monster Beverage Corp | LPKF Laser vs. Delta Air Lines | LPKF Laser vs. Pentair 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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