Correlation Between IPG Photonics and N2OFF

Can any of the company-specific risk be diversified away by investing in both IPG Photonics and N2OFF 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 N2OFF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IPG Photonics and N2OFF Inc, you can compare the effects of market volatilities on IPG Photonics and N2OFF 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 N2OFF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and N2OFF.

Diversification Opportunities for IPG Photonics and N2OFF

-0.2

Correlation Coefficient

IPG Photonics  N2OFF

Good diversification

The 3 months correlation between IPG and N2OFF is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and N2OFF Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N2OFF Inc 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 N2OFF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N2OFF Inc has no effect on the direction of IPG Photonics i.e., IPG Photonics and N2OFF go up and down completely randomly.

Pair Corralation between IPG Photonics and N2OFF

Given the investment horizon of 90 days IPG Photonics is expected to generate 0.24 times more return on investment than N2OFF. However, IPG Photonics is 4.18 times less risky than N2OFF. It trades about -0.44 of its potential returns per unit of risk. N2OFF Inc is currently generating about -0.72 per unit of risk. If you would invest  7,017  in IPG Photonics on December 4, 2024 and sell it today you would lose (1,124) from holding IPG Photonics or give up 16.02% 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.  N2OFF Inc

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

N2OFF Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in N2OFF Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, N2OFF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPG Photonics and N2OFF

The main advantage of trading using opposite IPG Photonics and N2OFF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, N2OFF 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 N2OFF will offset losses from the drop in N2OFF's long position.

The idea behind IPG Photonics and N2OFF Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.