Correlation Between LPKF Laser and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on LPKF Laser and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and STMICROELECTRONICS.
Diversification Opportunities for LPKF Laser and STMICROELECTRONICS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between LPKF and STMICROELECTRONICS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of LPKF Laser i.e., LPKF Laser and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between LPKF Laser and STMICROELECTRONICS
Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.81 times more return on investment than STMICROELECTRONICS. However, LPKF Laser Electronics is 1.23 times less risky than STMICROELECTRONICS. It trades about 0.16 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.03 per unit of risk. If you would invest 864.00 in LPKF Laser Electronics on October 20, 2024 and sell it today you would earn a total of 45.00 from holding LPKF Laser Electronics or generate 5.21% 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. STMICROELECTRONICS
Performance |
| Timeline |
| LPKF Laser Electronics |
| STMICROELECTRONICS |
LPKF Laser and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and STMICROELECTRONICS
The main advantage of trading using opposite LPKF Laser and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| LPKF Laser vs. GigaMedia | LPKF Laser vs. PARKEN Sport Entertainment | LPKF Laser vs. SQUIRREL MEDIA SA | LPKF Laser vs. PLAYSTUDIOS A DL 0001 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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