Correlation Between Awilco Drilling and IPG Photonics

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Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and IPG Photonics 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 Awilco Drilling and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and IPG Photonics, you can compare the effects of market volatilities on Awilco Drilling and IPG Photonics 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 Awilco Drilling with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and IPG Photonics.

Diversification Opportunities for Awilco Drilling and IPG Photonics

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Awilco and IPG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Awilco Drilling 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 Awilco Drilling PLC are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and IPG Photonics go up and down completely randomly.

Pair Corralation between Awilco Drilling and IPG Photonics

If you would invest  192.00  in Awilco Drilling PLC on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Awilco Drilling PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Awilco Drilling PLC  vs.  IPG Photonics

 Performance 
       Timeline  
Awilco Drilling PLC 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Awilco Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
IPG Photonics 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, IPG Photonics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Awilco Drilling and IPG Photonics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Awilco Drilling and IPG Photonics

The main advantage of trading using opposite Awilco Drilling and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.
The idea behind Awilco Drilling PLC and IPG Photonics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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