Correlation Between LPKF Laser and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Alfa Financial 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 LPKF Laser and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Alfa Financial Software, you can compare the effects of market volatilities on LPKF Laser and Alfa Financial 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 LPKF Laser with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Alfa Financial.
Diversification Opportunities for LPKF Laser and Alfa Financial
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPKF and Alfa is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of LPKF Laser i.e., LPKF Laser and Alfa Financial go up and down completely randomly.
Pair Corralation between LPKF Laser and Alfa Financial
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the Alfa Financial. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.04 times less risky than Alfa Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Alfa Financial Software is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Alfa Financial Software on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Alfa Financial Software or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Alfa Financial Software
Performance |
| Timeline |
| LPKF Laser Electronics |
| Alfa Financial Software |
LPKF Laser and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Alfa Financial
The main advantage of trading using opposite LPKF Laser and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| LPKF Laser vs. Alfa Financial Software | LPKF Laser vs. Transport International Holdings | LPKF Laser vs. Perma Fix Environmental Services | LPKF Laser vs. AXWAY SOFTWARE EO |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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