Correlation Between Videolocity International and IPG Photonics

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

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

Diversification Opportunities for Videolocity International and IPG Photonics

0.0

Correlation Coefficient

Videolocity International  IPG Photonics

Pay attention - limited upside

The 3 months correlation between Videolocity and IPG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Videolocity International and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Videolocity International 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 Videolocity International 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 Videolocity International i.e., Videolocity International and IPG Photonics go up and down completely randomly.

Pair Corralation between Videolocity International and IPG Photonics

If you would invest  7,043  in IPG Photonics on September 21, 2024 and sell it today you would earn a total of  339.00  from holding IPG Photonics or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Videolocity International  vs.  IPG Photonics

Videolocity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Videolocity International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Videolocity International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

IPG Photonics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Videolocity International and IPG Photonics

The main advantage of trading using opposite Videolocity International and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Videolocity International 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 Videolocity International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..