Correlation Between LPKF Laser and North American
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on LPKF Laser and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and North American.
Diversification Opportunities for LPKF Laser and North American
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and North is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of LPKF Laser i.e., LPKF Laser and North American go up and down completely randomly.
Pair Corralation between LPKF Laser and North American
Assuming the 90 days horizon LPKF Laser is expected to generate 178.88 times less return on investment than North American. But when comparing it to its historical volatility, LPKF Laser Electronics is 3.6 times less risky than North American. It trades about 0.0 of its potential returns per unit of risk. North American Construction is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,530 in North American Construction on September 1, 2024 and sell it today you would earn a total of 260.00 from holding North American Construction or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. North American Construction
Performance |
| Timeline |
| LPKF Laser Electronics |
| North American Const |
LPKF Laser and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and North American
The main advantage of trading using opposite LPKF Laser and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| LPKF Laser vs. ABB | LPKF Laser vs. Emerson Electric Co | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings |
| North American vs. Halliburton | North American vs. Tenaris SA | North American vs. Superior Plus Corp | North American vs. NMI 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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