Correlation Between IPG Photonics and YSX Tech

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

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

Diversification Opportunities for IPG Photonics and YSX Tech

0.44

Correlation Coefficient

IPG Photonics  YSX Tech

Very weak diversification

The 3 months correlation between IPG and YSX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and YSX Tech Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YSX Tech Co, 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 YSX Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YSX Tech Co, has no effect on the direction of IPG Photonics i.e., IPG Photonics and YSX Tech go up and down completely randomly.

Pair Corralation between IPG Photonics and YSX Tech

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the YSX Tech. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 5.62 times less risky than YSX Tech. The stock trades about -0.02 of its potential returns per unit of risk. The YSX Tech Co, is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  431.00  in YSX Tech Co, on October 25, 2024 and sell it today you would earn a total of  102.00  from holding YSX Tech Co, or generate 23.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.45%
Values	Daily Returns

IPG Photonics  vs.  YSX Tech Co,

IPG Photonics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

YSX Tech Co,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YSX Tech Co, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, YSX Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPG Photonics and YSX Tech

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

The idea behind IPG Photonics and YSX Tech Co, 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.