Correlation Between LPKF Laser and IND+COMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and IND+COMMBK CHINA 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 IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on LPKF Laser and IND+COMMBK CHINA 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 IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and IND+COMMBK CHINA.
Diversification Opportunities for LPKF Laser and IND+COMMBK CHINA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and IND+COMMBK is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 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 IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of LPKF Laser i.e., LPKF Laser and IND+COMMBK CHINA go up and down completely randomly.
Pair Corralation between LPKF Laser and IND+COMMBK CHINA
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.29 times more return on investment than IND+COMMBK CHINA. However, LPKF Laser Electronics is 3.41 times less risky than IND+COMMBK CHINA. It trades about -0.04 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about -0.06 per unit of risk. If you would invest 860.00 in LPKF Laser Electronics on September 5, 2024 and sell it today you would lose (7.00) from holding LPKF Laser Electronics or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| LPKF Laser Electronics |
| INDCOMMBK CHINA ADR20 |
LPKF Laser and IND+COMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and IND+COMMBK CHINA
The main advantage of trading using opposite LPKF Laser and IND+COMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, IND+COMMBK CHINA 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 IND+COMMBK CHINA will offset losses from the drop in IND+COMMBK CHINA's long position.| LPKF Laser vs. Schneider Electric SE | LPKF Laser vs. Emerson Electric Co | LPKF Laser vs. Parker Hannifin |
| IND+COMMBK CHINA vs. BOSTON BEER A | IND+COMMBK CHINA vs. Benchmark Electronics | IND+COMMBK CHINA vs. UMC Electronics Co | IND+COMMBK CHINA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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