Correlation Between PDF Solutions and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both PDF Solutions and IPG Photonics 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 PDF Solutions and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDF Solutions and IPG Photonics, you can compare the effects of market volatilities on PDF Solutions and IPG Photonics 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 PDF Solutions with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDF Solutions and IPG Photonics.
Diversification Opportunities for PDF Solutions and IPG Photonics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PDF and IPG is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding PDF Solutions and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and PDF Solutions 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 PDF Solutions are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of PDF Solutions i.e., PDF Solutions and IPG Photonics go up and down completely randomly.
Pair Corralation between PDF Solutions and IPG Photonics
Given the investment horizon of 90 days PDF Solutions is expected to generate 1.07 times more return on investment than IPG Photonics. However, PDF Solutions is 1.07 times more volatile than IPG Photonics. It trades about 0.01 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.0 per unit of risk. If you would invest 3,064 in PDF Solutions on August 27, 2024 and sell it today you would earn a total of 47.00 from holding PDF Solutions or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDF Solutions vs. IPG Photonics
Performance |
| Timeline |
| PDF Solutions |
| IPG Photonics |
PDF Solutions and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDF Solutions and IPG Photonics
The main advantage of trading using opposite PDF Solutions and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDF Solutions position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.The idea behind PDF Solutions and IPG Photonics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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