Correlation Between LPKF Laser and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on LPKF Laser and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and STORE ELECTRONIC.
Diversification Opportunities for LPKF Laser and STORE ELECTRONIC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LPKF and STORE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of LPKF Laser i.e., LPKF Laser and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between LPKF Laser and STORE ELECTRONIC
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.53 times more return on investment than STORE ELECTRONIC. However, LPKF Laser Electronics is 1.89 times less risky than STORE ELECTRONIC. It trades about 0.11 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about -0.08 per unit of risk. If you would invest 891.00 in LPKF Laser Electronics on October 29, 2024 and sell it today you would earn a total of 23.00 from holding LPKF Laser Electronics or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. STORE ELECTRONIC
Performance |
| Timeline |
| LPKF Laser Electronics |
| STORE ELECTRONIC |
LPKF Laser and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and STORE ELECTRONIC
The main advantage of trading using opposite LPKF Laser and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| LPKF Laser vs. Honeywell International | LPKF Laser vs. Illinois Tool Works | LPKF Laser vs. Eaton PLC | LPKF Laser vs. Trane Technologies plc |
| STORE ELECTRONIC vs. PARKEN Sport Entertainment | STORE ELECTRONIC vs. China Communications Services | STORE ELECTRONIC vs. Ribbon Communications | STORE ELECTRONIC vs. Iridium Communications |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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