Correlation Between SmartKem, Common and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both SmartKem, Common 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 SmartKem, Common and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartKem, Common Stock and IPG Photonics, you can compare the effects of market volatilities on SmartKem, Common 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 SmartKem, Common with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartKem, Common and IPG Photonics.
Diversification Opportunities for SmartKem, Common and IPG Photonics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SmartKem, and IPG is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding SmartKem, Common Stock and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and SmartKem, Common 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 SmartKem, Common Stock 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 SmartKem, Common i.e., SmartKem, Common and IPG Photonics go up and down completely randomly.
Pair Corralation between SmartKem, Common and IPG Photonics
Given the investment horizon of 90 days SmartKem, Common Stock is expected to generate 6.59 times more return on investment than IPG Photonics. However, SmartKem, Common is 6.59 times more volatile than IPG Photonics. It trades about 0.26 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.01 per unit of risk. If you would invest 260.00 in SmartKem, Common Stock on August 28, 2024 and sell it today you would earn a total of 283.00 from holding SmartKem, Common Stock or generate 108.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SmartKem, Common Stock vs. IPG Photonics
Performance |
| Timeline |
| SmartKem, Common Stock |
| IPG Photonics |
SmartKem, Common and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SmartKem, Common and IPG Photonics
The main advantage of trading using opposite SmartKem, Common and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartKem, Common 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.| SmartKem, Common vs. Atomera | SmartKem, Common vs. Aehr Test Systems | SmartKem, Common vs. indie Semiconductor | SmartKem, Common vs. KLA Tencor |
| 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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