Correlation Between IPG Photonics and CLPS
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and CLPS 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 CLPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and CLPS Inc, you can compare the effects of market volatilities on IPG Photonics and CLPS 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 CLPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and CLPS.
Diversification Opportunities for IPG Photonics and CLPS
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between IPG and CLPS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc 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 CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of IPG Photonics i.e., IPG Photonics and CLPS go up and down completely randomly.
Pair Corralation between IPG Photonics and CLPS
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the CLPS. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.61 times less risky than CLPS. The stock trades about -0.04 of its potential returns per unit of risk. The CLPS Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 90.00 in CLPS Inc on November 3, 2024 and sell it today you would earn a total of 36.00 from holding CLPS Inc or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. CLPS Inc
Performance |
| Timeline |
| IPG Photonics |
| CLPS Inc |
IPG Photonics and CLPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and CLPS
The main advantage of trading using opposite IPG Photonics and CLPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, CLPS 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 CLPS will offset losses from the drop in CLPS's long position.| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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