Correlation Between NuRAN Wireless and IPG Photonics

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

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

Diversification Opportunities for NuRAN Wireless and IPG Photonics

0.26

Correlation Coefficient

NuRAN Wireless  IPG Photonics

Modest diversification

The 3 months correlation between NuRAN and IPG is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NuRAN Wireless and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and NuRAN Wireless 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 NuRAN Wireless are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of NuRAN Wireless i.e., NuRAN Wireless and IPG Photonics go up and down completely randomly.

Pair Corralation between NuRAN Wireless and IPG Photonics

Assuming the 90 days horizon NuRAN Wireless is expected to under-perform the IPG Photonics. But the pink sheet apears to be less risky and, when comparing its historical volatility, NuRAN Wireless is 1.01 times less risky than IPG Photonics. The pink sheet trades about -0.5 of its potential returns per unit of risk. The IPG Photonics is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  8,131  in IPG Photonics on October 8, 2024 and sell it today you would lose (530.00) from holding IPG Photonics or give up 6.52% of portfolio value over 90 days.

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

NuRAN Wireless  vs.  IPG Photonics

NuRAN Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuRAN Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with NuRAN Wireless and IPG Photonics

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

The idea behind NuRAN Wireless and IPG Photonics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.