Correlation Between LPKF Laser and AstraZeneca PLC

Can any of the company-specific risk be diversified away by investing in both LPKF Laser and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on LPKF Laser and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and AstraZeneca PLC.

Diversification Opportunities for LPKF Laser and AstraZeneca PLC

0.17

Correlation Coefficient

LPKF Laser  AstraZeneca PLC

Average diversification

The 3 months correlation between LPKF and AstraZeneca is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of LPKF Laser i.e., LPKF Laser and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between LPKF Laser and AstraZeneca PLC

Assuming the 90 days trading horizon LPKF Laser is expected to generate 5.89 times less return on investment than AstraZeneca PLC. In addition to that, LPKF Laser is 1.72 times more volatile than AstraZeneca PLC. It trades about 0.02 of its total potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.17 per unit of volatility. If you would invest  1,047,850  in AstraZeneca PLC on December 4, 2024 and sell it today you would earn a total of  142,550  from holding AstraZeneca PLC or generate 13.6% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  AstraZeneca PLC

LPKF Laser Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LPKF Laser is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AstraZeneca PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AstraZeneca PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and AstraZeneca PLC

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

The idea behind LPKF Laser Electronics and AstraZeneca PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.