Correlation Between IPG Photonics and Bolt Projects

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

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

Diversification Opportunities for IPG Photonics and Bolt Projects

-0.13

Correlation Coefficient

IPG Photonics  Bolt Projects

Good diversification

The 3 months correlation between IPG and Bolt is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Bolt Projects Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Projects Holdings, and IPG Photonics 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 IPG Photonics are associated (or correlated) with Bolt Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Projects Holdings, has no effect on the direction of IPG Photonics i.e., IPG Photonics and Bolt Projects go up and down completely randomly.

Pair Corralation between IPG Photonics and Bolt Projects

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Bolt Projects. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 8.63 times less risky than Bolt Projects. The stock trades about -0.01 of its potential returns per unit of risk. The Bolt Projects Holdings, is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Bolt Projects Holdings, on October 24, 2024 and sell it today you would earn a total of  0.94  from holding Bolt Projects Holdings, or generate 23.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

IPG Photonics  vs.  Bolt Projects Holdings,

IPG Photonics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days IPG Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bolt Projects Holdings,

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Bolt Projects Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady forward-looking signals, Bolt Projects showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPG Photonics and Bolt Projects

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

The idea behind IPG Photonics and Bolt Projects Holdings, 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.