Correlation Between LPKF Laser and Seche Environnement

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

Diversification Opportunities for LPKF Laser and Seche Environnement

0.54

Correlation Coefficient

LPKF Laser  Seche Environnement

Very weak diversification

The 3 months correlation between LPKF and Seche is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Seche Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnement 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 Seche Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnement has no effect on the direction of LPKF Laser i.e., LPKF Laser and Seche Environnement go up and down completely randomly.

Pair Corralation between LPKF Laser and Seche Environnement

Assuming the 90 days trading horizon LPKF Laser is expected to generate 3.88 times less return on investment than Seche Environnement. But when comparing it to its historical volatility, LPKF Laser Electronics is 1.01 times less risky than Seche Environnement. It trades about 0.06 of its potential returns per unit of risk. Seche Environnement SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7,700  in Seche Environnement SA on April 23, 2025 and sell it today you would earn a total of  2,600  from holding Seche Environnement SA or generate 33.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

LPKF Laser Electronics  vs.  Seche Environnement SA

LPKF Laser Electronics

Risk-Adjusted Performance

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. In spite of comparatively uncertain basic indicators, LPKF Laser may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Seche Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnement SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Seche Environnement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and Seche Environnement

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

The idea behind LPKF Laser Electronics and Seche Environnement SA 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.