Correlation Between Lifeway Foods and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and LPKF Laser 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 Lifeway Foods and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and LPKF Laser Electronics, you can compare the effects of market volatilities on Lifeway Foods and LPKF Laser 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 Lifeway Foods with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and LPKF Laser.
Diversification Opportunities for Lifeway Foods and LPKF Laser
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and LPKF is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Lifeway Foods 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 Lifeway Foods are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and LPKF Laser go up and down completely randomly.
Pair Corralation between Lifeway Foods and LPKF Laser
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the LPKF Laser. In addition to that, Lifeway Foods is 5.73 times more volatile than LPKF Laser Electronics. It trades about -0.01 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.0 per unit of volatility. If you would invest 860.00 in LPKF Laser Electronics on September 1, 2024 and sell it today you would earn a total of 0.00 from holding LPKF Laser Electronics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. LPKF Laser Electronics
Performance |
| Timeline |
| Lifeway Foods |
| LPKF Laser Electronics |
Lifeway Foods and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and LPKF Laser
The main advantage of trading using opposite Lifeway Foods and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Lifeway Foods vs. ScanSource | Lifeway Foods vs. Waste Management | Lifeway Foods vs. Brockhaus Capital Management | Lifeway Foods vs. Consolidated Communications Holdings |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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