Correlation Between IPG Photonics and DIH Holdings

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

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

Diversification Opportunities for IPG Photonics and DIH Holdings

-0.01

Correlation Coefficient

IPG Photonics  DIH Holdings

Good diversification

The 3 months correlation between IPG and DIH is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and DIH Holdings US, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIH Holdings US, 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 DIH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIH Holdings US, has no effect on the direction of IPG Photonics i.e., IPG Photonics and DIH Holdings go up and down completely randomly.

Pair Corralation between IPG Photonics and DIH Holdings

Given the investment horizon of 90 days IPG Photonics is expected to generate 0.21 times more return on investment than DIH Holdings. However, IPG Photonics is 4.67 times less risky than DIH Holdings. It trades about -0.03 of its potential returns per unit of risk. DIH Holdings US, is currently generating about -0.02 per unit of risk. If you would invest  8,761  in IPG Photonics on October 25, 2024 and sell it today you would lose (1,052) from holding IPG Photonics or give up 12.01% of portfolio value over 90 days.

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

IPG Photonics  vs.  DIH Holdings US,

IPG Photonics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 1 (%) 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.

DIH Holdings US,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DIH Holdings US, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, DIH Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPG Photonics and DIH Holdings

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

The idea behind IPG Photonics and DIH Holdings US, 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.