Correlation Between LPKF Laser and ORIX JREIT

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

Diversification Opportunities for LPKF Laser and ORIX JREIT

-0.18

Correlation Coefficient

LPKF Laser  ORIX JREIT

Good diversification

The 3 months correlation between LPKF and ORIX is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC 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 ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of LPKF Laser i.e., LPKF Laser and ORIX JREIT go up and down completely randomly.

Pair Corralation between LPKF Laser and ORIX JREIT

Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the ORIX JREIT. In addition to that, LPKF Laser is 2.14 times more volatile than ORIX JREIT INC. It trades about -0.04 of its total potential returns per unit of risk. ORIX JREIT INC is currently generating about 0.15 per unit of volatility. If you would invest  94,372  in ORIX JREIT INC on December 20, 2024 and sell it today you would earn a total of  10,628  from holding ORIX JREIT INC or generate 11.26% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  ORIX JREIT INC

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.

ORIX JREIT INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ORIX JREIT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LPKF Laser and ORIX JREIT

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

The idea behind LPKF Laser Electronics and ORIX JREIT INC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.