Correlation Between Secure Property and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Secure Property 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 Secure Property and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secure Property Development and LPKF Laser Electronics, you can compare the effects of market volatilities on Secure Property 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 Secure Property with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Property and LPKF Laser.
Diversification Opportunities for Secure Property and LPKF Laser
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Secure and LPKF is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Secure Property Development 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 Secure Property 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 Secure Property Development 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 Secure Property i.e., Secure Property and LPKF Laser go up and down completely randomly.
Pair Corralation between Secure Property and LPKF Laser
Assuming the 90 days trading horizon Secure Property Development is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, Secure Property Development is 1.56 times less risky than LPKF Laser. The stock trades about -0.03 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,135 in LPKF Laser Electronics on September 4, 2024 and sell it today you would lose (266.00) from holding LPKF Laser Electronics or give up 23.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Secure Property Development vs. LPKF Laser Electronics
Performance |
| Timeline |
| Secure Property Deve |
| LPKF Laser Electronics |
Secure Property and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secure Property and LPKF Laser
The main advantage of trading using opposite Secure Property and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secure Property 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.| Secure Property vs. Inspiration Healthcare Group | Secure Property vs. Endeavour Mining Corp | Secure Property vs. Bisichi Mining PLC | Secure Property vs. Silvercorp Metals |
| LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Hyundai Motor | LPKF Laser vs. Toyota Motor Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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