Correlation Between Global Technology and IPG Photonics

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Can any of the company-specific risk be diversified away by investing in both Global Technology 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 Global Technology and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Acquisition and IPG Photonics, you can compare the effects of market volatilities on Global Technology 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 Global Technology with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and IPG Photonics.

Diversification Opportunities for Global Technology and IPG Photonics

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Global and IPG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Acquisition and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Global Technology 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 Global Technology Acquisition 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 Global Technology i.e., Global Technology and IPG Photonics go up and down completely randomly.

Pair Corralation between Global Technology and IPG Photonics

If you would invest  1,147  in Global Technology Acquisition on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Global Technology Acquisition or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Global Technology Acquisition  vs.  IPG Photonics

 Performance 
       Timeline  
Global Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Global Technology Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.
IPG Photonics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics reported solid returns over the last few months and may actually be approaching a breakup point.

Global Technology and IPG Photonics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Technology and IPG Photonics

The main advantage of trading using opposite Global Technology and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology 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 Global Technology Acquisition 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.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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