Correlation Between IPG Photonics and Skillful Craftsman
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Skillful Craftsman 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 Skillful Craftsman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Skillful Craftsman Education, you can compare the effects of market volatilities on IPG Photonics and Skillful Craftsman 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 Skillful Craftsman. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Skillful Craftsman.
Diversification Opportunities for IPG Photonics and Skillful Craftsman
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPG and Skillful is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Skillful Craftsman Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillful Craftsman 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 Skillful Craftsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillful Craftsman has no effect on the direction of IPG Photonics i.e., IPG Photonics and Skillful Craftsman go up and down completely randomly.
Pair Corralation between IPG Photonics and Skillful Craftsman
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Skillful Craftsman. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.46 times less risky than Skillful Craftsman. The stock trades about -0.04 of its potential returns per unit of risk. The Skillful Craftsman Education is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Skillful Craftsman Education on October 13, 2024 and sell it today you would earn a total of 12.00 from holding Skillful Craftsman Education or generate 11.32% 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. Skillful Craftsman Education
Performance |
| Timeline |
| IPG Photonics |
| Skillful Craftsman |
IPG Photonics and Skillful Craftsman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Skillful Craftsman
The main advantage of trading using opposite IPG Photonics and Skillful Craftsman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Skillful Craftsman 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 Skillful Craftsman will offset losses from the drop in Skillful Craftsman's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Skillful Craftsman vs. Wah Fu Education | Skillful Craftsman vs. Golden Sun Education | Skillful Craftsman vs. Elite Education Group | Skillful Craftsman vs. QuantaSing Group Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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