Correlation Between Japan Tobacco and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco 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 Japan Tobacco and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and LPKF Laser Electronics, you can compare the effects of market volatilities on Japan Tobacco 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 Japan Tobacco with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and LPKF Laser.
Diversification Opportunities for Japan Tobacco and LPKF Laser
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and LPKF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco i.e., Japan Tobacco and LPKF Laser go up and down completely randomly.
Pair Corralation between Japan Tobacco and LPKF Laser
Assuming the 90 days horizon Japan Tobacco is expected to generate 0.41 times more return on investment than LPKF Laser. However, Japan Tobacco is 2.43 times less risky than LPKF Laser. It trades about 0.15 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.22 per unit of risk. If you would invest 2,536 in Japan Tobacco on September 12, 2024 and sell it today you would earn a total of 114.00 from holding Japan Tobacco or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. LPKF Laser Electronics
Performance |
| Timeline |
| Japan Tobacco |
| LPKF Laser Electronics |
Japan Tobacco and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and LPKF Laser
The main advantage of trading using opposite Japan Tobacco and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco 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.| Japan Tobacco vs. TEXAS ROADHOUSE | Japan Tobacco vs. COPLAND ROAD CAPITAL | Japan Tobacco vs. QUEEN S ROAD | Japan Tobacco vs. Kaufman Broad SA |
| LPKF Laser vs. Schneider Electric SE | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. SIVERS SEMICONDUCTORS AB | LPKF Laser vs. Norsk Hydro ASA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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