Correlation Between LPKF Laser and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and ASPEN TECHINC 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 ASPEN TECHINC 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 ASPEN TECHINC DL, you can compare the effects of market volatilities on LPKF Laser and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and ASPEN TECHINC.
Diversification Opportunities for LPKF Laser and ASPEN TECHINC
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between LPKF and ASPEN is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of LPKF Laser i.e., LPKF Laser and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between LPKF Laser and ASPEN TECHINC
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the ASPEN TECHINC. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.05 times less risky than ASPEN TECHINC. The stock trades about -0.13 of its potential returns per unit of risk. The ASPEN TECHINC DL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 22,200 in ASPEN TECHINC DL on August 31, 2024 and sell it today you would earn a total of 1,200 from holding ASPEN TECHINC DL or generate 5.41% 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. ASPEN TECHINC DL
Performance |
| Timeline |
| LPKF Laser Electronics |
| ASPEN TECHINC DL |
LPKF Laser and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and ASPEN TECHINC
The main advantage of trading using opposite LPKF Laser and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.| LPKF Laser vs. ABB | LPKF Laser vs. Emerson Electric Co | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings |
| ASPEN TECHINC vs. Haverty Furniture Companies | ASPEN TECHINC vs. LPKF Laser Electronics | ASPEN TECHINC vs. EIDESVIK OFFSHORE NK | ASPEN TECHINC vs. American Homes 4 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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