Correlation Between Luxfer Holdings and Laser Photonics
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Laser Photonics 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 Luxfer Holdings and Laser Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luxfer Holdings PLC and Laser Photonics, you can compare the effects of market volatilities on Luxfer Holdings and Laser Photonics 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 Luxfer Holdings with a short position of Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Laser Photonics.
Diversification Opportunities for Luxfer Holdings and Laser Photonics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luxfer and Laser is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics and Luxfer Holdings 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 Luxfer Holdings PLC are associated (or correlated) with Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Laser Photonics go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Laser Photonics
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 12.13 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Luxfer Holdings PLC is 2.49 times less risky than Laser Photonics. It trades about 0.03 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 476.00 in Laser Photonics on September 5, 2024 and sell it today you would earn a total of 74.00 from holding Laser Photonics or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Laser Photonics
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Laser Photonics |
Luxfer Holdings and Laser Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Laser Photonics
The main advantage of trading using opposite Luxfer Holdings and Laser Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Laser Photonics 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 Laser Photonics will offset losses from the drop in Laser Photonics' long position.| Luxfer Holdings vs. Laser Photonics | Luxfer Holdings vs. Siemens AG Class | Luxfer Holdings vs. ATVRockN | Luxfer Holdings vs. Nuburu Inc |
| Laser Photonics vs. Nuburu Inc | Laser Photonics vs. JE Cleantech Holdings | Laser Photonics vs. Reelcause | Laser Photonics vs. Shapeways Holdings, Common |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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