Correlation Between LPKF Laser and MediaZest Plc

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

Diversification Opportunities for LPKF Laser and MediaZest Plc

0.72

Correlation Coefficient

LPKF Laser  MediaZest Plc

Poor diversification

The 3 months correlation between LPKF and MediaZest is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and MediaZest plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZest plc 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 MediaZest Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZest plc has no effect on the direction of LPKF Laser i.e., LPKF Laser and MediaZest Plc go up and down completely randomly.

Pair Corralation between LPKF Laser and MediaZest Plc

Assuming the 90 days trading horizon LPKF Laser is expected to generate 9.18 times less return on investment than MediaZest Plc. But when comparing it to its historical volatility, LPKF Laser Electronics is 2.3 times less risky than MediaZest Plc. It trades about 0.02 of its potential returns per unit of risk. MediaZest plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.75  in MediaZest plc on April 24, 2025 and sell it today you would earn a total of  1.75  from holding MediaZest plc or generate 25.93% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  MediaZest plc

LPKF Laser Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LPKF Laser is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MediaZest plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaZest plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, MediaZest Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and MediaZest Plc

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

The idea behind LPKF Laser Electronics and MediaZest plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..