Correlation Between LPKF Laser and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and BlueScope Steel 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 BlueScope Steel 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 BlueScope Steel Limited, you can compare the effects of market volatilities on LPKF Laser and BlueScope Steel 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 BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and BlueScope Steel.
Diversification Opportunities for LPKF Laser and BlueScope Steel
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPKF and BlueScope is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel 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 BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of LPKF Laser i.e., LPKF Laser and BlueScope Steel go up and down completely randomly.
Pair Corralation between LPKF Laser and BlueScope Steel
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.98 times more return on investment than BlueScope Steel. However, LPKF Laser Electronics is 1.02 times less risky than BlueScope Steel. It trades about 0.16 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.08 per unit of risk. If you would invest 864.00 in LPKF Laser Electronics on October 20, 2024 and sell it today you would earn a total of 45.00 from holding LPKF Laser Electronics or generate 5.21% 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. BlueScope Steel Limited
Performance |
| Timeline |
| LPKF Laser Electronics |
| BlueScope Steel |
LPKF Laser and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and BlueScope Steel
The main advantage of trading using opposite LPKF Laser and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| LPKF Laser vs. GigaMedia | LPKF Laser vs. PARKEN Sport Entertainment | LPKF Laser vs. SQUIRREL MEDIA SA | LPKF Laser vs. PLAYSTUDIOS A DL 0001 |
| BlueScope Steel vs. INSURANCE AUST GRP | BlueScope Steel vs. AOI Electronics Co | BlueScope Steel vs. Zurich Insurance Group | BlueScope Steel vs. TT Electronics PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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