Correlation Between IPG Photonics and Rand Capital

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

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

Diversification Opportunities for IPG Photonics and Rand Capital

-0.63

Correlation Coefficient

IPG Photonics  Rand Capital

Excellent diversification

The 3 months correlation between IPG and Rand is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of IPG Photonics i.e., IPG Photonics and Rand Capital go up and down completely randomly.

Pair Corralation between IPG Photonics and Rand Capital

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Rand Capital. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 2.0 times less risky than Rand Capital. The stock trades about -0.08 of its potential returns per unit of risk. The Rand Capital Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,779  in Rand Capital Corp on December 26, 2024 and sell it today you would earn a total of  122.00  from holding Rand Capital Corp or generate 6.86% return on investment over 90 days.

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

IPG Photonics  vs.  Rand Capital Corp

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.

Rand Capital Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPG Photonics and Rand Capital

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

The idea behind IPG Photonics and Rand Capital Corp 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.