Correlation Between LPKF Laser and China Resources
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on LPKF Laser and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and China Resources.
Diversification Opportunities for LPKF Laser and China Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LPKF and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of LPKF Laser i.e., LPKF Laser and China Resources go up and down completely randomly.
Pair Corralation between LPKF Laser and China Resources
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 1.66 times less risky than China Resources. The stock trades about -0.06 of its potential returns per unit of risk. The China Resources Beer is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 256.00 in China Resources Beer on September 12, 2024 and sell it today you would earn a total of 82.00 from holding China Resources Beer or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. China Resources Beer
Performance |
| Timeline |
| LPKF Laser Electronics |
| China Resources Beer |
LPKF Laser and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and China Resources
The main advantage of trading using opposite LPKF Laser and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| LPKF Laser vs. Schneider Electric SE | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. SIVERS SEMICONDUCTORS AB | LPKF Laser vs. Norsk Hydro ASA |
| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. SIVERS SEMICONDUCTORS AB | China Resources vs. NorAm Drilling AS |
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 Stocks Directory module to find actively traded stocks across global markets.
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