Correlation Between LPKF Laser and ALLIANZ SE

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

Diversification Opportunities for LPKF Laser and ALLIANZ SE

-0.62

Correlation Coefficient

LPKF Laser  ALLIANZ SE

Excellent diversification

The 3 months correlation between LPKF and ALLIANZ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and ALLIANZ SE UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANZ SE UNSPADR 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 ALLIANZ SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLIANZ SE UNSPADR has no effect on the direction of LPKF Laser i.e., LPKF Laser and ALLIANZ SE go up and down completely randomly.

Pair Corralation between LPKF Laser and ALLIANZ SE

Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the ALLIANZ SE. In addition to that, LPKF Laser is 1.73 times more volatile than ALLIANZ SE UNSPADR. It trades about -0.05 of its total potential returns per unit of risk. ALLIANZ SE UNSPADR is currently generating about 0.21 per unit of volatility. If you would invest  2,900  in ALLIANZ SE UNSPADR on December 21, 2024 and sell it today you would earn a total of  600.00  from holding ALLIANZ SE UNSPADR or generate 20.69% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  ALLIANZ SE UNSPADR

LPKF Laser Electronics

Risk-Adjusted Performance

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ALLIANZ SE UNSPADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALLIANZ SE UNSPADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALLIANZ SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and ALLIANZ SE

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

The idea behind LPKF Laser Electronics and ALLIANZ SE UNSPADR 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.