Correlation Between IPG Photonics and Qualys
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Qualys 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 Qualys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Qualys Inc, you can compare the effects of market volatilities on IPG Photonics and Qualys 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 Qualys. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Qualys.
Diversification Opportunities for IPG Photonics and Qualys
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Qualys is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of IPG Photonics i.e., IPG Photonics and Qualys go up and down completely randomly.
Pair Corralation between IPG Photonics and Qualys
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Qualys. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 2.45 times less risky than Qualys. The stock trades about -0.07 of its potential returns per unit of risk. The Qualys Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 11,924 in Qualys Inc on September 1, 2024 and sell it today you would earn a total of 3,436 from holding Qualys Inc or generate 28.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Qualys Inc
Performance |
| Timeline |
| IPG Photonics |
| Qualys Inc |
IPG Photonics and Qualys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Qualys
The main advantage of trading using opposite IPG Photonics and Qualys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Qualys 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 Qualys will offset losses from the drop in Qualys' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Qualys vs. Palo Alto Networks | Qualys vs. Uipath Inc | Qualys vs. Block Inc | Qualys vs. Adobe Systems Incorporated |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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