Correlation Between LPKF Laser and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on LPKF Laser and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Solstad Offshore.
Diversification Opportunities for LPKF Laser and Solstad Offshore
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPKF and Solstad is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of LPKF Laser i.e., LPKF Laser and Solstad Offshore go up and down completely randomly.
Pair Corralation between LPKF Laser and Solstad Offshore
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 1.66 times less risky than Solstad Offshore. The stock trades about -0.01 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 278.00 in Solstad Offshore ASA on September 3, 2024 and sell it today you would earn a total of 71.00 from holding Solstad Offshore ASA or generate 25.54% 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. Solstad Offshore ASA
Performance |
| Timeline |
| LPKF Laser Electronics |
| Solstad Offshore ASA |
LPKF Laser and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Solstad Offshore
The main advantage of trading using opposite LPKF Laser and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| LPKF Laser vs. IDP EDUCATION LTD | LPKF Laser vs. EMBARK EDUCATION LTD | LPKF Laser vs. CAREER EDUCATION | LPKF Laser vs. Adtalem Global Education |
| Solstad Offshore vs. Liberty Broadband | Solstad Offshore vs. CHINA EDUCATION GROUP | Solstad Offshore vs. BROADSTNET LEADL 00025 | Solstad Offshore vs. EEDUCATION ALBERT AB |
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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