Correlation Between NorAm Drilling and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling 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 NorAm Drilling and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and LPKF Laser Electronics, you can compare the effects of market volatilities on NorAm Drilling 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 NorAm Drilling with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and LPKF Laser.
Diversification Opportunities for NorAm Drilling and LPKF Laser
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and LPKF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS 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 NorAm Drilling 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and LPKF Laser go up and down completely randomly.
Pair Corralation between NorAm Drilling and LPKF Laser
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 2.07 times more return on investment than LPKF Laser. However, NorAm Drilling is 2.07 times more volatile than LPKF Laser Electronics. It trades about 0.12 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.23 per unit of risk. If you would invest 295.00 in NorAm Drilling AS on October 16, 2024 and sell it today you would earn a total of 18.00 from holding NorAm Drilling AS or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. LPKF Laser Electronics
Performance |
| Timeline |
| NorAm Drilling AS |
| LPKF Laser Electronics |
NorAm Drilling and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and LPKF Laser
The main advantage of trading using opposite NorAm Drilling and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling 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.| NorAm Drilling vs. Nordic Semiconductor ASA | NorAm Drilling vs. X FAB Silicon Foundries | NorAm Drilling vs. Semiconductor Manufacturing International | NorAm Drilling vs. NXP Semiconductors NV |
| LPKF Laser vs. UPDATE SOFTWARE | LPKF Laser vs. MagnaChip Semiconductor Corp | LPKF Laser vs. NTG Nordic Transport | LPKF Laser vs. Yuexiu Transport Infrastructure |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |