Correlation Between AUST AGRICULTURAL and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL 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 AUST AGRICULTURAL and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and LPKF Laser Electronics, you can compare the effects of market volatilities on AUST AGRICULTURAL 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 AUST AGRICULTURAL with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and LPKF Laser.
Diversification Opportunities for AUST AGRICULTURAL and LPKF Laser
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUST and LPKF is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL i.e., AUST AGRICULTURAL and LPKF Laser go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and LPKF Laser
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 2.95 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 0.02 of returns per unit of risk over similar time horizon. If you would invest 884.00 in LPKF Laser Electronics on September 25, 2024 and sell it today you would earn a total of 6.00 from holding LPKF Laser Electronics or generate 0.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AUST AGRICULTURAL vs. LPKF Laser Electronics
Performance |
Timeline |
AUST AGRICULTURAL |
LPKF Laser Electronics |
AUST AGRICULTURAL and LPKF Laser Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AUST AGRICULTURAL and LPKF Laser
The main advantage of trading using opposite AUST AGRICULTURAL and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL 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.AUST AGRICULTURAL vs. WillScot Mobile Mini | AUST AGRICULTURAL vs. AIR PRODCHEMICALS | AUST AGRICULTURAL vs. Singapore Telecommunications Limited | AUST AGRICULTURAL vs. Luckin Coffee |
LPKF Laser vs. Ryanair Holdings plc | LPKF Laser vs. Titan Machinery | LPKF Laser vs. Westinghouse Air Brake | LPKF Laser vs. AUST AGRICULTURAL |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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