Correlation Between LPKF Laser and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on LPKF Laser and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Evonik Industries.
Diversification Opportunities for LPKF Laser and Evonik Industries
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and Evonik is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of LPKF Laser i.e., LPKF Laser and Evonik Industries go up and down completely randomly.
Pair Corralation between LPKF Laser and Evonik Industries
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the Evonik Industries. In addition to that, LPKF Laser is 1.89 times more volatile than Evonik Industries AG. It trades about -0.01 of its total potential returns per unit of risk. Evonik Industries AG is currently generating about 0.02 per unit of volatility. If you would invest 1,562 in Evonik Industries AG on September 2, 2024 and sell it today you would earn a total of 174.00 from holding Evonik Industries AG or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Evonik Industries AG
Performance |
| Timeline |
| LPKF Laser Electronics |
| Evonik Industries |
LPKF Laser and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Evonik Industries
The main advantage of trading using opposite LPKF Laser and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| LPKF Laser vs. SBA Communications Corp | LPKF Laser vs. AIR PRODCHEMICALS | LPKF Laser vs. Sterling Construction | LPKF Laser vs. DAIRY FARM INTL |
| Evonik Industries vs. AWILCO DRILLING PLC | Evonik Industries vs. LION ONE METALS | Evonik Industries vs. GREENX METALS LTD | Evonik Industries vs. LPKF Laser Electronics |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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