Correlation Between LPKF Laser and Trade Desk

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

Diversification Opportunities for LPKF Laser and Trade Desk

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between LPKF and Trade is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of LPKF Laser i.e., LPKF Laser and Trade Desk go up and down completely randomly.

Pair Corralation between LPKF Laser and Trade Desk

Assuming the 90 days horizon LPKF Laser Electronics is expected to generate 2.23 times more return on investment than Trade Desk. However, LPKF Laser is 2.23 times more volatile than The Trade Desk. It trades about 0.08 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.09 per unit of risk. If you would invest  852.00  in LPKF Laser Electronics on September 27, 2024 and sell it today you would earn a total of  58.00  from holding LPKF Laser Electronics or generate 6.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

LPKF Laser Electronics  vs.  The Trade Desk

 Performance 
       Timeline  
LPKF Laser Electronics 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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 fragile basic indicators, LPKF Laser may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Trade Desk 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Trade Desk reported solid returns over the last few months and may actually be approaching a breakup point.

LPKF Laser and Trade Desk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LPKF Laser and Trade Desk

The main advantage of trading using opposite LPKF Laser and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.
The idea behind LPKF Laser Electronics and The Trade Desk 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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