Correlation Between LPKF Laser and Boyd Gaming

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

Diversification Opportunities for LPKF Laser and Boyd Gaming

-0.53

Correlation Coefficient

LPKF Laser  Boyd Gaming

Excellent diversification

The 3 months correlation between LPKF and Boyd is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming 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 Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of LPKF Laser i.e., LPKF Laser and Boyd Gaming go up and down completely randomly.

Pair Corralation between LPKF Laser and Boyd Gaming

Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the Boyd Gaming. In addition to that, LPKF Laser is 1.48 times more volatile than Boyd Gaming. It trades about -0.01 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.04 per unit of volatility. If you would invest  5,276  in Boyd Gaming on October 4, 2024 and sell it today you would earn a total of  1,574  from holding Boyd Gaming or generate 29.83% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  Boyd Gaming

LPKF Laser Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Boyd Gaming

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and Boyd Gaming

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

The idea behind LPKF Laser Electronics and Boyd Gaming 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 Commodity Directory module to find actively traded commodities issued by global exchanges.