Correlation Between IPG Photonics and 713448FG8

Can any of the company-specific risk be diversified away by investing in both IPG Photonics and 713448FG8 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 713448FG8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IPG Photonics and PEP 275 21 OCT 51, you can compare the effects of market volatilities on IPG Photonics and 713448FG8 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 713448FG8. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and 713448FG8.

Diversification Opportunities for IPG Photonics and 713448FG8

-0.31

Correlation Coefficient

IPG Photonics  713448FG8

Very good diversification

The 3 months correlation between IPG and 713448FG8 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and PEP 275 21 OCT 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEP 275 21 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 713448FG8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEP 275 21 has no effect on the direction of IPG Photonics i.e., IPG Photonics and 713448FG8 go up and down completely randomly.

Pair Corralation between IPG Photonics and 713448FG8

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the 713448FG8. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.1 times less risky than 713448FG8. The stock trades about -0.03 of its potential returns per unit of risk. The PEP 275 21 OCT 51 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,745  in PEP 275 21 OCT 51 on October 13, 2024 and sell it today you would earn a total of  116.00  from holding PEP 275 21 OCT 51 or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

IPG Photonics  vs.  PEP 275 21 OCT 51

IPG Photonics

Risk-Adjusted Performance

0 of 100

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 relatively invariable technical and fundamental indicators, IPG Photonics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

PEP 275 21

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PEP 275 21 OCT 51 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 713448FG8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IPG Photonics and 713448FG8

The main advantage of trading using opposite IPG Photonics and 713448FG8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, 713448FG8 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 713448FG8 will offset losses from the drop in 713448FG8's long position.

The idea behind IPG Photonics and PEP 275 21 OCT 51 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.