Correlation Between Kronos Worldwide and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide 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 Kronos Worldwide and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Worldwide and LPKF Laser Electronics, you can compare the effects of market volatilities on Kronos Worldwide 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 Kronos Worldwide with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and LPKF Laser.
Diversification Opportunities for Kronos Worldwide and LPKF Laser
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kronos and LPKF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide i.e., Kronos Worldwide and LPKF Laser go up and down completely randomly.
Pair Corralation between Kronos Worldwide and LPKF Laser
Assuming the 90 days horizon Kronos Worldwide is expected to generate 1.21 times more return on investment than LPKF Laser. However, Kronos Worldwide is 1.21 times more volatile than LPKF Laser Electronics. It trades about 0.04 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.05 per unit of risk. If you would invest 1,034 in Kronos Worldwide on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Kronos Worldwide or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kronos Worldwide vs. LPKF Laser Electronics
Performance |
| Timeline |
| Kronos Worldwide |
| LPKF Laser Electronics |
Kronos Worldwide and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kronos Worldwide and LPKF Laser
The main advantage of trading using opposite Kronos Worldwide and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Worldwide 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.| Kronos Worldwide vs. Pembina Pipeline Corp | Kronos Worldwide vs. Perseus Mining Limited | Kronos Worldwide vs. Western Copper and | Kronos Worldwide vs. Goodyear Tire Rubber |
| LPKF Laser vs. SBA Communications Corp | LPKF Laser vs. AIR PRODCHEMICALS | LPKF Laser vs. Sterling Construction | LPKF Laser vs. DAIRY FARM INTL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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