Correlation Between Canaan and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Canaan 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 Canaan and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaan Inc and IPG Photonics, you can compare the effects of market volatilities on Canaan 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 Canaan with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaan and IPG Photonics.
Diversification Opportunities for Canaan and IPG Photonics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canaan and IPG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Canaan 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 Canaan Inc 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 Canaan i.e., Canaan and IPG Photonics go up and down completely randomly.
Pair Corralation between Canaan and IPG Photonics
Considering the 90-day investment horizon Canaan Inc is expected to generate 2.99 times more return on investment than IPG Photonics. However, Canaan is 2.99 times more volatile than IPG Photonics. It trades about 0.02 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.0 per unit of risk. If you would invest 241.00 in Canaan Inc on August 30, 2024 and sell it today you would lose (59.00) from holding Canaan Inc or give up 24.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Canaan Inc vs. IPG Photonics
Performance |
| Timeline |
| Canaan Inc |
| IPG Photonics |
Canaan and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaan and IPG Photonics
The main advantage of trading using opposite Canaan and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaan 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.| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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