Correlation Between Ceres Power and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Ceres Power 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 Ceres Power and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and LPKF Laser Electronics, you can compare the effects of market volatilities on Ceres Power 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 Ceres Power with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and LPKF Laser.
Diversification Opportunities for Ceres Power and LPKF Laser
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceres and LPKF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings 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 Ceres Power 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 Ceres Power Holdings 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 Ceres Power i.e., Ceres Power and LPKF Laser go up and down completely randomly.
Pair Corralation between Ceres Power and LPKF Laser
Assuming the 90 days trading horizon Ceres Power Holdings is expected to under-perform the LPKF Laser. In addition to that, Ceres Power is 4.46 times more volatile than LPKF Laser Electronics. It trades about -0.25 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.15 per unit of volatility. If you would invest 880.00 in LPKF Laser Electronics on September 1, 2024 and sell it today you would lose (20.00) from holding LPKF Laser Electronics or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ceres Power Holdings vs. LPKF Laser Electronics
Performance |
| Timeline |
| Ceres Power Holdings |
| LPKF Laser Electronics |
Ceres Power and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and LPKF Laser
The main advantage of trading using opposite Ceres Power and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power 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.| Ceres Power vs. Datagroup SE | Ceres Power vs. Eastman Chemical Co | Ceres Power vs. Ion Beam Applications | Ceres Power vs. Automatic Data Processing |
| LPKF Laser vs. Coor Service Management | LPKF Laser vs. Empire Metals Limited | LPKF Laser vs. Adriatic Metals | LPKF Laser vs. Golden Metal Resources |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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