Correlation Between IPG Photonics and Critical Metals

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

By analyzing existing cross correlation between IPG Photonics and Critical Metals Corp, you can compare the effects of market volatilities on IPG Photonics and Critical Metals 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 Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Critical Metals.

Diversification Opportunities for IPG Photonics and Critical Metals

0.85

Correlation Coefficient

IPG Photonics  Critical Metals

Very poor diversification

The 3 months correlation between IPG and Critical is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp 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 Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of IPG Photonics i.e., IPG Photonics and Critical Metals go up and down completely randomly.

Pair Corralation between IPG Photonics and Critical Metals

Given the investment horizon of 90 days IPG Photonics is expected to generate 0.23 times more return on investment than Critical Metals. However, IPG Photonics is 4.38 times less risky than Critical Metals. It trades about -0.05 of its potential returns per unit of risk. Critical Metals Corp is currently generating about -0.18 per unit of risk. If you would invest  7,342  in IPG Photonics on December 27, 2024 and sell it today you would lose (681.00) from holding IPG Photonics or give up 9.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

IPG Photonics  vs.  Critical Metals Corp

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.

Critical Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Critical Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with IPG Photonics and Critical Metals

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

The idea behind IPG Photonics and Critical Metals Corp 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 CEOs Directory module to screen CEOs from public companies around the world.