Correlation Between Advanced Micro and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and IPG Photonics, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and IPG Photonics.
Diversification Opportunities for Advanced Micro and IPG Photonics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Advanced and IPG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and IPG Photonics go up and down completely randomly.
Pair Corralation between Advanced Micro and IPG Photonics
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the IPG Photonics. In addition to that, Advanced Micro is 1.13 times more volatile than IPG Photonics. It trades about -0.14 of its total potential returns per unit of risk. IPG Photonics is currently generating about -0.01 per unit of volatility. If you would invest 7,476 in IPG Photonics on August 24, 2024 and sell it today you would lose (124.00) from holding IPG Photonics or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. IPG Photonics
Performance |
| Timeline |
| Advanced Micro Devices |
| IPG Photonics |
Advanced Micro and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and IPG Photonics
The main advantage of trading using opposite Advanced Micro and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. Eshallgo Class A | Advanced Micro vs. Amtech Systems | Advanced Micro vs. Gold Fields Ltd | Advanced Micro vs. Aegean Airlines SA |
| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Photronics | IPG Photonics vs. Veeco Instruments |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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