Correlation Between Comstock Holding and IPG Photonics

Can any of the company-specific risk be diversified away by investing in both Comstock Holding 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 Comstock Holding and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comstock Holding Companies and IPG Photonics, you can compare the effects of market volatilities on Comstock Holding 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 Comstock Holding with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comstock Holding and IPG Photonics.

Diversification Opportunities for Comstock Holding and IPG Photonics

0.59

Correlation Coefficient

Comstock Holding  IPG Photonics

Very weak diversification

The 3 months correlation between Comstock and IPG is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Holding Companies and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Comstock Holding 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 Comstock Holding Companies 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 Comstock Holding i.e., Comstock Holding and IPG Photonics go up and down completely randomly.

Pair Corralation between Comstock Holding and IPG Photonics

Given the investment horizon of 90 days Comstock Holding Companies is expected to generate 1.84 times more return on investment than IPG Photonics. However, Comstock Holding is 1.84 times more volatile than IPG Photonics. It trades about 0.12 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.06 per unit of risk. If you would invest  782.00  in Comstock Holding Companies on December 27, 2024 and sell it today you would earn a total of  242.00  from holding Comstock Holding Companies or generate 30.95% return on investment over 90 days.

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

Comstock Holding Companies  vs.  IPG Photonics

Comstock Holding Com

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Holding Companies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Comstock Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

IPG Photonics

Risk-Adjusted Performance

Very Weak

Over the last 90 days IPG Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Comstock Holding and IPG Photonics

The main advantage of trading using opposite Comstock Holding and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comstock Holding 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 Comstock Holding Companies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.