Correlation Between LPKF Laser and ONEOK

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

Diversification Opportunities for LPKF Laser and ONEOK

-0.46

Correlation Coefficient

LPKF Laser  ONEOK

Very good diversification

The 3 months correlation between LPKF and ONEOK is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK 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 ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of LPKF Laser i.e., LPKF Laser and ONEOK go up and down completely randomly.

Pair Corralation between LPKF Laser and ONEOK

Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 1.65 times more return on investment than ONEOK. However, LPKF Laser is 1.65 times more volatile than ONEOK Inc. It trades about 0.13 of its potential returns per unit of risk. ONEOK Inc is currently generating about -0.05 per unit of risk. If you would invest  833.00  in LPKF Laser Electronics on October 11, 2024 and sell it today you would earn a total of  43.00  from holding LPKF Laser Electronics or generate 5.16% 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.  ONEOK Inc

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ONEOK Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONEOK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and ONEOK

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

The idea behind LPKF Laser Electronics and ONEOK 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..