Correlation Between IPG Photonics and Hafnia
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Hafnia Limited, you can compare the effects of market volatilities on IPG Photonics and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Hafnia.
Diversification Opportunities for IPG Photonics and Hafnia
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Hafnia is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of IPG Photonics i.e., IPG Photonics and Hafnia go up and down completely randomly.
Pair Corralation between IPG Photonics and Hafnia
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.63 times more return on investment than Hafnia. However, IPG Photonics is 1.58 times less risky than Hafnia. It trades about -0.25 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.23 per unit of risk. If you would invest 7,267 in IPG Photonics on December 2, 2024 and sell it today you would lose (1,448) from holding IPG Photonics or give up 19.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
IPG Photonics vs. Hafnia Limited
Performance |
Timeline |
IPG Photonics |
Hafnia Limited |
IPG Photonics and Hafnia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IPG Photonics and Hafnia
The main advantage of trading using opposite IPG Photonics and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
Hafnia vs. Essent Group | Hafnia vs. Universal Insurance Holdings | Hafnia vs. Palomar Holdings | Hafnia vs. Evergy, |
Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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