Correlation Between Neometals and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Neometals 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 Neometals and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and LPKF Laser Electronics, you can compare the effects of market volatilities on Neometals 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 Neometals with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and LPKF Laser.
Diversification Opportunities for Neometals and LPKF Laser
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Neometals and LPKF is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Neometals 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 Neometals 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 Neometals 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 Neometals i.e., Neometals and LPKF Laser go up and down completely randomly.
Pair Corralation between Neometals and LPKF Laser
Assuming the 90 days trading horizon Neometals is expected to under-perform the LPKF Laser. In addition to that, Neometals is 1.61 times more volatile than LPKF Laser Electronics. It trades about -0.21 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.1 per unit of volatility. If you would invest 881.00 in LPKF Laser Electronics on August 30, 2024 and sell it today you would lose (13.00) from holding LPKF Laser Electronics or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neometals vs. LPKF Laser Electronics
Performance |
| Timeline |
| Neometals |
| LPKF Laser Electronics |
Neometals and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and LPKF Laser
The main advantage of trading using opposite Neometals and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals 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.The idea behind Neometals and LPKF Laser Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LPKF Laser vs. Lendinvest PLC | LPKF Laser vs. Neometals | LPKF Laser vs. Albion Technology General | LPKF Laser vs. Jupiter Fund Management |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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