Correlation Between Carsales and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and LPKF Laser Electronics, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and LPKF Laser.
Diversification Opportunities for Carsales and LPKF Laser
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and LPKF is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Carsales 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 Carsales 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 Carsales 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 Carsales i.e., Carsales and LPKF Laser go up and down completely randomly.
Pair Corralation between Carsales and LPKF Laser
Assuming the 90 days trading horizon Carsales is expected to generate 1.93 times more return on investment than LPKF Laser. However, Carsales is 1.93 times more volatile than LPKF Laser Electronics. It trades about 0.21 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.11 per unit of risk. If you would invest 2,180 in Carsales on October 29, 2024 and sell it today you would earn a total of 200.00 from holding Carsales or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. LPKF Laser Electronics
Performance |
| Timeline |
| Carsales |
| LPKF Laser Electronics |
Carsales and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and LPKF Laser
The main advantage of trading using opposite Carsales and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. AEON STORES | Carsales vs. WILLIS LEASE FIN | Carsales vs. GRENKELEASING Dusseldorf | Carsales vs. Perseus Mining Limited |
| LPKF Laser vs. Honeywell International | LPKF Laser vs. Illinois Tool Works | LPKF Laser vs. Eaton PLC | LPKF Laser vs. Trane Technologies plc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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