Correlation Between Empire Metals and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and LPKF Laser Electronics, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and LPKF Laser.
Diversification Opportunities for Empire Metals and LPKF Laser
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and LPKF is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and LPKF Laser go up and down completely randomly.
Pair Corralation between Empire Metals and LPKF Laser
Assuming the 90 days trading horizon Empire Metals Limited is expected to under-perform the LPKF Laser. In addition to that, Empire Metals is 1.44 times more volatile than LPKF Laser Electronics. It trades about -0.28 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.03 per unit of volatility. If you would invest 880.00 in LPKF Laser Electronics on September 3, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. LPKF Laser Electronics
Performance |
| Timeline |
| Empire Metals Limited |
| LPKF Laser Electronics |
Empire Metals and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and LPKF Laser
The main advantage of trading using opposite Empire Metals and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.The idea behind Empire Metals Limited and LPKF Laser Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LPKF Laser vs. Catalyst Media Group | LPKF Laser vs. CATLIN GROUP | LPKF Laser vs. Magnora ASA | LPKF Laser vs. RTW Venture Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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