Correlation Between IPG Photonics and Planet 13

Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Planet 13 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 Planet 13 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IPG Photonics and Planet 13 Holdings, you can compare the effects of market volatilities on IPG Photonics and Planet 13 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 Planet 13. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Planet 13.

Diversification Opportunities for IPG Photonics and Planet 13

0.71

Correlation Coefficient

IPG Photonics  Planet 13

Poor diversification

The 3 months correlation between IPG and Planet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Planet 13 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet 13 Holdings 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 Planet 13. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet 13 Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Planet 13 go up and down completely randomly.

Pair Corralation between IPG Photonics and Planet 13

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Planet 13. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.76 times less risky than Planet 13. The stock trades about -0.07 of its potential returns per unit of risk. The Planet 13 Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Planet 13 Holdings on December 19, 2024 and sell it today you would lose (5.00) from holding Planet 13 Holdings or give up 13.51% of portfolio value over 90 days.

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

IPG Photonics  vs.  Planet 13 Holdings

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.

Planet 13 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet 13 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with IPG Photonics and Planet 13

The main advantage of trading using opposite IPG Photonics and Planet 13 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Planet 13 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 Planet 13 will offset losses from the drop in Planet 13's long position.

The idea behind IPG Photonics and Planet 13 Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.