Correlation Between LPKF Laser and Forsys Metals
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Forsys Metals 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 Forsys Metals 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 Forsys Metals Corp, you can compare the effects of market volatilities on LPKF Laser and Forsys Metals 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 Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Forsys Metals.
Diversification Opportunities for LPKF Laser and Forsys Metals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LPKF and Forsys is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of LPKF Laser i.e., LPKF Laser and Forsys Metals go up and down completely randomly.
Pair Corralation between LPKF Laser and Forsys Metals
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.91 times more return on investment than Forsys Metals. However, LPKF Laser Electronics is 1.09 times less risky than Forsys Metals. It trades about 0.05 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about -0.01 per unit of risk. If you would invest 852.00 in LPKF Laser Electronics on October 19, 2024 and sell it today you would earn a total of 45.00 from holding LPKF Laser Electronics or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Forsys Metals Corp
Performance |
| Timeline |
| LPKF Laser Electronics |
| Forsys Metals Corp |
LPKF Laser and Forsys Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Forsys Metals
The main advantage of trading using opposite LPKF Laser and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Forsys Metals 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 Forsys Metals will offset losses from the drop in Forsys Metals' long position.| LPKF Laser vs. The Home Depot | LPKF Laser vs. DFS Furniture PLC | LPKF Laser vs. Xenia Hotels Resorts | LPKF Laser vs. KENEDIX OFFICE INV |
| Forsys Metals vs. LPKF Laser Electronics | Forsys Metals vs. Vienna Insurance Group | Forsys Metals vs. ARROW ELECTRONICS | Forsys Metals vs. United Insurance Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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