Correlation Between Micron Technology and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and LPKF Laser Electronics, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and LPKF Laser.
Diversification Opportunities for Micron Technology and LPKF Laser
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Micron and LPKF is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and LPKF Laser go up and down completely randomly.
Pair Corralation between Micron Technology and LPKF Laser
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.09 times more return on investment than LPKF Laser. However, Micron Technology is 1.09 times more volatile than LPKF Laser Electronics. It trades about 0.05 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.01 per unit of risk. If you would invest 5,567 in Micron Technology on October 13, 2024 and sell it today you would earn a total of 3,967 from holding Micron Technology or generate 71.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. LPKF Laser Electronics
Performance |
| Timeline |
| Micron Technology |
| LPKF Laser Electronics |
Micron Technology and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and LPKF Laser
The main advantage of trading using opposite Micron Technology and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.| Micron Technology vs. Summit Materials | Micron Technology vs. Vulcan Materials | Micron Technology vs. Materialise NV | Micron Technology vs. Rayonier Advanced Materials |
| LPKF Laser vs. Micron Technology | LPKF Laser vs. Hyrican Informationssysteme Aktiengesellschaft | LPKF Laser vs. Pure Storage | LPKF Laser vs. Take Two Interactive Software |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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