Correlation Between LPKF Laser and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and METHODE ELECTRONICS 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 METHODE ELECTRONICS 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 METHODE ELECTRONICS, you can compare the effects of market volatilities on LPKF Laser and METHODE ELECTRONICS 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 METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and METHODE ELECTRONICS.
Diversification Opportunities for LPKF Laser and METHODE ELECTRONICS
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPKF and METHODE is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS 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 METHODE ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METHODE ELECTRONICS has no effect on the direction of LPKF Laser i.e., LPKF Laser and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between LPKF Laser and METHODE ELECTRONICS
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 1.16 times more return on investment than METHODE ELECTRONICS. However, LPKF Laser is 1.16 times more volatile than METHODE ELECTRONICS. It trades about -0.03 of its potential returns per unit of risk. METHODE ELECTRONICS is currently generating about -0.05 per unit of risk. If you would invest 901.00 in LPKF Laser Electronics on November 29, 2024 and sell it today you would lose (31.00) from holding LPKF Laser Electronics or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LPKF Laser Electronics vs. METHODE ELECTRONICS
Performance |
| Timeline |
| LPKF Laser Electronics |
| METHODE ELECTRONICS |
LPKF Laser and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and METHODE ELECTRONICS
The main advantage of trading using opposite LPKF Laser and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, METHODE ELECTRONICS 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 METHODE ELECTRONICS will offset losses from the drop in METHODE ELECTRONICS's long position.| LPKF Laser vs. Linedata Services SA | LPKF Laser vs. China Datang | LPKF Laser vs. MICRONIC MYDATA | LPKF Laser vs. Data3 Limited |
| METHODE ELECTRONICS vs. Nippon Light Metal | METHODE ELECTRONICS vs. PARKEN SPORT ENT | METHODE ELECTRONICS vs. RESMINING UNSPADR10 | METHODE ELECTRONICS vs. LI METAL P |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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