Correlation Between Induction Healthcare and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare 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 Induction Healthcare and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and LPKF Laser Electronics, you can compare the effects of market volatilities on Induction Healthcare 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 Induction Healthcare with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and LPKF Laser.
Diversification Opportunities for Induction Healthcare and LPKF Laser
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Induction and LPKF is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group 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 Induction Healthcare 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 Induction Healthcare Group 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 Induction Healthcare i.e., Induction Healthcare and LPKF Laser go up and down completely randomly.
Pair Corralation between Induction Healthcare and LPKF Laser
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the LPKF Laser. In addition to that, Induction Healthcare is 1.98 times more volatile than LPKF Laser Electronics. It trades about -0.08 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.04 per unit of volatility. If you would invest 1,014 in LPKF Laser Electronics on September 12, 2024 and sell it today you would lose (199.00) from holding LPKF Laser Electronics or give up 19.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Induction Healthcare Group vs. LPKF Laser Electronics
Performance |
| Timeline |
| Induction Healthcare |
| LPKF Laser Electronics |
Induction Healthcare and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and LPKF Laser
The main advantage of trading using opposite Induction Healthcare and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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.| Induction Healthcare vs. Roebuck Food Group | Induction Healthcare vs. Axfood AB | Induction Healthcare vs. Virgin Wines UK | Induction Healthcare vs. Intuitive Investments Group |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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