Correlation Between Richardson Electronics and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Richardson Electronics 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 Richardson Electronics and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richardson Electronics and LPKF Laser Electronics, you can compare the effects of market volatilities on Richardson Electronics 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 Richardson Electronics with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richardson Electronics and LPKF Laser.
Diversification Opportunities for Richardson Electronics and LPKF Laser
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Richardson and LPKF is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics i.e., Richardson Electronics and LPKF Laser go up and down completely randomly.
Pair Corralation between Richardson Electronics and LPKF Laser
Assuming the 90 days horizon Richardson Electronics is expected to generate 3.59 times more return on investment than LPKF Laser. However, Richardson Electronics is 3.59 times more volatile than LPKF Laser Electronics. It trades about 0.09 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.2 per unit of risk. If you would invest 1,270 in Richardson Electronics on August 30, 2024 and sell it today you would earn a total of 81.00 from holding Richardson Electronics or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richardson Electronics vs. LPKF Laser Electronics
Performance |
| Timeline |
| Richardson Electronics |
| LPKF Laser Electronics |
Richardson Electronics and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richardson Electronics and LPKF Laser
The main advantage of trading using opposite Richardson Electronics and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics 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.| Richardson Electronics vs. PLAYSTUDIOS A DL 0001 | Richardson Electronics vs. ePlay Digital | Richardson Electronics vs. NORDHEALTH AS NK | Richardson Electronics vs. CVS Health |
| LPKF Laser vs. ABB | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings | LPKF Laser vs. SIVERS SEMICONDUCTORS AB |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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