Correlation Between IPG Photonics and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Compania Cervecerias 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 IPG Photonics and Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Compania Cervecerias Unidas, you can compare the effects of market volatilities on IPG Photonics and Compania Cervecerias 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 IPG Photonics with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Compania Cervecerias.
Diversification Opportunities for IPG Photonics and Compania Cervecerias
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPG and Compania is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and IPG Photonics 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 IPG Photonics are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of IPG Photonics i.e., IPG Photonics and Compania Cervecerias go up and down completely randomly.
Pair Corralation between IPG Photonics and Compania Cervecerias
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Compania Cervecerias. In addition to that, IPG Photonics is 1.38 times more volatile than Compania Cervecerias Unidas. It trades about -0.05 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.0 per unit of volatility. If you would invest 1,467 in Compania Cervecerias Unidas on December 1, 2024 and sell it today you would lose (72.00) from holding Compania Cervecerias Unidas or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| IPG Photonics |
| Compania Cervecerias |
IPG Photonics and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Compania Cervecerias
The main advantage of trading using opposite IPG Photonics and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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