Correlation Between Flowserve and Laser Photonics
Can any of the company-specific risk be diversified away by investing in both Flowserve and Laser Photonics 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 Flowserve and Laser Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Laser Photonics, you can compare the effects of market volatilities on Flowserve and Laser Photonics 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 Flowserve with a short position of Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Laser Photonics.
Diversification Opportunities for Flowserve and Laser Photonics
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flowserve and Laser is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics and Flowserve 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 Flowserve are associated (or correlated) with Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Flowserve i.e., Flowserve and Laser Photonics go up and down completely randomly.
Pair Corralation between Flowserve and Laser Photonics
Considering the 90-day investment horizon Flowserve is expected to generate 9.42 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Flowserve is 8.23 times less risky than Laser Photonics. It trades about 0.11 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Laser Photonics on August 28, 2024 and sell it today you would earn a total of 397.00 from holding Laser Photonics or generate 204.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Laser Photonics
Performance |
| Timeline |
| Flowserve |
| Laser Photonics |
Flowserve and Laser Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Laser Photonics
The main advantage of trading using opposite Flowserve and Laser Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Laser Photonics 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 Laser Photonics will offset losses from the drop in Laser Photonics' long position.| Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
| Laser Photonics vs. Nuburu Inc | Laser Photonics vs. JE Cleantech Holdings | Laser Photonics vs. Reelcause | Laser Photonics vs. Shapeways Holdings, Common |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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