Correlation Between LPKF Laser and LEROY SEAFOOD

Can any of the company-specific risk be diversified away by investing in both LPKF Laser and LEROY SEAFOOD 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 LPKF Laser and LEROY SEAFOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LPKF Laser Electronics and LEROY SEAFOOD GRUNSPADR, you can compare the effects of market volatilities on LPKF Laser and LEROY SEAFOOD 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 LPKF Laser with a short position of LEROY SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and LEROY SEAFOOD.

Diversification Opportunities for LPKF Laser and LEROY SEAFOOD

-0.05

Correlation Coefficient

LPKF Laser  LEROY SEAFOOD

Good diversification

The 3 months correlation between LPKF and LEROY is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and LEROY SEAFOOD GRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEROY SEAFOOD GRUNSPADR and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with LEROY SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEROY SEAFOOD GRUNSPADR has no effect on the direction of LPKF Laser i.e., LPKF Laser and LEROY SEAFOOD go up and down completely randomly.

Pair Corralation between LPKF Laser and LEROY SEAFOOD

Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 1.71 times more return on investment than LEROY SEAFOOD. However, LPKF Laser is 1.71 times more volatile than LEROY SEAFOOD GRUNSPADR. It trades about 0.01 of its potential returns per unit of risk. LEROY SEAFOOD GRUNSPADR is currently generating about 0.01 per unit of risk. If you would invest  876.00  in LPKF Laser Electronics on September 22, 2024 and sell it today you would lose (12.00) from holding LPKF Laser Electronics or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LPKF Laser Electronics  vs.  LEROY SEAFOOD GRUNSPADR

LPKF Laser Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LPKF Laser Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LPKF Laser is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LEROY SEAFOOD GRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEROY SEAFOOD GRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, LEROY SEAFOOD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LPKF Laser and LEROY SEAFOOD

The main advantage of trading using opposite LPKF Laser and LEROY SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, LEROY SEAFOOD 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 LEROY SEAFOOD will offset losses from the drop in LEROY SEAFOOD's long position.

The idea behind LPKF Laser Electronics and LEROY SEAFOOD GRUNSPADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.