Correlation Between LPKF Laser and STORE ELECTRONIC

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

Diversification Opportunities for LPKF Laser and STORE ELECTRONIC

0.08

Correlation Coefficient

LPKF Laser  STORE ELECTRONIC

Significant diversification

The 3 months correlation between LPKF and STORE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of LPKF Laser i.e., LPKF Laser and STORE ELECTRONIC go up and down completely randomly.

Pair Corralation between LPKF Laser and STORE ELECTRONIC

Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 0.93 times more return on investment than STORE ELECTRONIC. However, LPKF Laser Electronics is 1.08 times less risky than STORE ELECTRONIC. It trades about 0.05 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.02 per unit of risk. If you would invest  819.00  in LPKF Laser Electronics on September 4, 2024 and sell it today you would earn a total of  43.00  from holding LPKF Laser Electronics or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

LPKF Laser Electronics  vs.  STORE ELECTRONIC

LPKF Laser Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 4 (%) 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.

STORE ELECTRONIC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, STORE ELECTRONIC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LPKF Laser and STORE ELECTRONIC

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

The idea behind LPKF Laser Electronics and STORE ELECTRONIC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.