Correlation Between LPKF Laser and BII Railway
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on LPKF Laser and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and BII Railway.
Diversification Opportunities for LPKF Laser and BII Railway
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LPKF and BII is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of LPKF Laser i.e., LPKF Laser and BII Railway go up and down completely randomly.
Pair Corralation between LPKF Laser and BII Railway
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 2.77 times more return on investment than BII Railway. However, LPKF Laser is 2.77 times more volatile than BII Railway Transportation. It trades about -0.03 of its potential returns per unit of risk. BII Railway Transportation is currently generating about -0.09 per unit of risk. If you would invest 849.00 in LPKF Laser Electronics on September 14, 2024 and sell it today you would lose (47.00) from holding LPKF Laser Electronics or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. BII Railway Transportation
Performance |
| Timeline |
| LPKF Laser Electronics |
| BII Railway Transpor |
LPKF Laser and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and BII Railway
The main advantage of trading using opposite LPKF Laser and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's 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 |
| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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