Correlation Between LPN Development and Micro Leasing
Can any of the company-specific risk be diversified away by investing in both LPN Development and Micro Leasing 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 LPN Development and Micro Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPN Development Public and Micro Leasing Public, you can compare the effects of market volatilities on LPN Development and Micro Leasing 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 LPN Development with a short position of Micro Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPN Development and Micro Leasing.
Diversification Opportunities for LPN Development and Micro Leasing
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LPN and Micro is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LPN Development Public and Micro Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Leasing Public and LPN Development 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 LPN Development Public are associated (or correlated) with Micro Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Leasing Public has no effect on the direction of LPN Development i.e., LPN Development and Micro Leasing go up and down completely randomly.
Pair Corralation between LPN Development and Micro Leasing
Assuming the 90 days trading horizon LPN Development Public is expected to generate 0.17 times more return on investment than Micro Leasing. However, LPN Development Public is 5.99 times less risky than Micro Leasing. It trades about -0.06 of its potential returns per unit of risk. Micro Leasing Public is currently generating about -0.34 per unit of risk. If you would invest 286.00 in LPN Development Public on September 12, 2024 and sell it today you would lose (2.00) from holding LPN Development Public or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
LPN Development Public vs. Micro Leasing Public
Performance |
| Timeline |
| LPN Development Public |
| Micro Leasing Public |
LPN Development and Micro Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPN Development and Micro Leasing
The main advantage of trading using opposite LPN Development and Micro Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPN Development position performs unexpectedly, Micro Leasing 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 Micro Leasing will offset losses from the drop in Micro Leasing's long position.| LPN Development vs. Land and Houses | LPN Development vs. AP Public | LPN Development vs. Quality Houses Public | LPN Development vs. Siri Prime Office |
| Micro Leasing vs. Amanah Leasing Public | Micro Leasing vs. Muangthai Capital Public | Micro Leasing vs. Infraset Public | Micro Leasing vs. JMT Network Services |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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