Correlation Between Silver Bullet and LPKF Laser

Can any of the company-specific risk be diversified away by investing in both Silver Bullet and LPKF Laser 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 Silver Bullet and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Silver Bullet Data and LPKF Laser Electronics, you can compare the effects of market volatilities on Silver Bullet and LPKF Laser 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 Silver Bullet with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Bullet and LPKF Laser.

Diversification Opportunities for Silver Bullet and LPKF Laser

0.76

Correlation Coefficient

Silver Bullet  LPKF Laser

Poor diversification

The 3 months correlation between Silver and LPKF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Silver Bullet Data and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Silver Bullet 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 Silver Bullet Data are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Silver Bullet i.e., Silver Bullet and LPKF Laser go up and down completely randomly.

Pair Corralation between Silver Bullet and LPKF Laser

Assuming the 90 days trading horizon Silver Bullet Data is expected to under-perform the LPKF Laser. In addition to that, Silver Bullet is 1.1 times more volatile than LPKF Laser Electronics. It trades about -0.38 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.07 per unit of volatility. If you would invest  924.00  in LPKF Laser Electronics on December 22, 2024 and sell it today you would lose (86.00) from holding LPKF Laser Electronics or give up 9.31% of portfolio value over 90 days.

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

Silver Bullet Data  vs.  LPKF Laser Electronics

Silver Bullet Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Bullet Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Silver Bullet and LPKF Laser

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

The idea behind Silver Bullet Data and LPKF Laser Electronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.