Correlation Between IPG Photonics and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Coupang LLC 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 Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Coupang LLC, you can compare the effects of market volatilities on IPG Photonics and Coupang LLC 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 Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Coupang LLC.
Diversification Opportunities for IPG Photonics and Coupang LLC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Coupang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC 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 Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of IPG Photonics i.e., IPG Photonics and Coupang LLC go up and down completely randomly.
Pair Corralation between IPG Photonics and Coupang LLC
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Coupang LLC. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.08 times less risky than Coupang LLC. The stock trades about -0.03 of its potential returns per unit of risk. The Coupang LLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,608 in Coupang LLC on August 24, 2024 and sell it today you would earn a total of 792.00 from holding Coupang LLC or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
IPG Photonics vs. Coupang LLC
Performance |
| Timeline |
| IPG Photonics |
| Coupang LLC |
IPG Photonics and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Coupang LLC
The main advantage of trading using opposite IPG Photonics and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC's long position.| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Veeco Instruments | IPG Photonics vs. Ultra Clean Holdings |
| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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