Correlation Between IPG Photonics and Ipsos SA

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

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

Diversification Opportunities for IPG Photonics and Ipsos SA

-0.74

Correlation Coefficient

IPG Photonics  Ipsos SA

Pay attention - limited upside

The 3 months correlation between IPG and Ipsos is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Ipsos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsos SA 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 Ipsos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsos SA has no effect on the direction of IPG Photonics i.e., IPG Photonics and Ipsos SA go up and down completely randomly.

Pair Corralation between IPG Photonics and Ipsos SA

Given the investment horizon of 90 days IPG Photonics is expected to generate 3.77 times more return on investment than Ipsos SA. However, IPG Photonics is 3.77 times more volatile than Ipsos SA. It trades about 0.13 of its potential returns per unit of risk. Ipsos SA is currently generating about -0.11 per unit of risk. If you would invest  6,554  in IPG Photonics on September 5, 2024 and sell it today you would earn a total of  1,227  from holding IPG Photonics or generate 18.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

IPG Photonics  vs.  Ipsos SA

IPG Photonics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics reported solid returns over the last few months and may actually be approaching a breakup point.

Ipsos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ipsos SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IPG Photonics and Ipsos SA

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

The idea behind IPG Photonics and Ipsos SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.