Correlation Between Japan Medical and LPKF Laser

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

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

Diversification Opportunities for Japan Medical and LPKF Laser

-0.46

Correlation Coefficient

Japan Medical  LPKF Laser

Very good diversification

The 3 months correlation between Japan and LPKF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic 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 Japan Medical 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 Japan Medical Dynamic 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 Japan Medical i.e., Japan Medical and LPKF Laser go up and down completely randomly.

Pair Corralation between Japan Medical and LPKF Laser

Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.68 times less risky than LPKF Laser. The stock trades about -0.12 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  826.00  in LPKF Laser Electronics on April 24, 2025 and sell it today you would earn a total of  49.00  from holding LPKF Laser Electronics or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Japan Medical Dynamic  vs.  LPKF Laser Electronics

Japan Medical Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Medical Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, LPKF Laser may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Japan Medical and LPKF Laser

The main advantage of trading using opposite Japan Medical and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical 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 Japan Medical Dynamic 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.