Correlation Between Golden Metal and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Golden Metal 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 Golden Metal and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and LPKF Laser Electronics, you can compare the effects of market volatilities on Golden Metal 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 Golden Metal with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and LPKF Laser.
Diversification Opportunities for Golden Metal and LPKF Laser
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and LPKF is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources 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 Golden Metal 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 Golden Metal Resources 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 Golden Metal i.e., Golden Metal and LPKF Laser go up and down completely randomly.
Pair Corralation between Golden Metal and LPKF Laser
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 8.14 times more return on investment than LPKF Laser. However, Golden Metal is 8.14 times more volatile than LPKF Laser Electronics. It trades about 0.21 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.11 per unit of risk. If you would invest 2,480 in Golden Metal Resources on August 31, 2024 and sell it today you would earn a total of 620.00 from holding Golden Metal Resources or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. LPKF Laser Electronics
Performance |
| Timeline |
| Golden Metal Resources |
| LPKF Laser Electronics |
Golden Metal and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and LPKF Laser
The main advantage of trading using opposite Golden Metal and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal 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.| Golden Metal vs. Bankers Investment Trust | Golden Metal vs. Oakley Capital Investments | Golden Metal vs. Federal Realty Investment | Golden Metal vs. New Residential Investment |
| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser vs. JLEN Environmental Assets |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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