Correlation Between 17327CAQ6 and IPG Photonics

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Can any of the company-specific risk be diversified away by investing in both 17327CAQ6 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 17327CAQ6 and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C 3057 25 JAN 33 and IPG Photonics, you can compare the effects of market volatilities on 17327CAQ6 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 17327CAQ6 with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of 17327CAQ6 and IPG Photonics.

Diversification Opportunities for 17327CAQ6 and IPG Photonics

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 17327CAQ6 and IPG is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding C 3057 25 JAN 33 and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and 17327CAQ6 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 C 3057 25 JAN 33 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 17327CAQ6 i.e., 17327CAQ6 and IPG Photonics go up and down completely randomly.

Pair Corralation between 17327CAQ6 and IPG Photonics

Assuming the 90 days trading horizon C 3057 25 JAN 33 is expected to generate 0.24 times more return on investment than IPG Photonics. However, C 3057 25 JAN 33 is 4.1 times less risky than IPG Photonics. It trades about 0.0 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.03 per unit of risk. If you would invest  8,470  in C 3057 25 JAN 33 on September 5, 2024 and sell it today you would earn a total of  0.00  from holding C 3057 25 JAN 33 or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy97.6%
ValuesDaily Returns

C 3057 25 JAN 33  vs.  IPG Photonics

 Performance 
       Timeline  
C 3057 25 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days C 3057 25 JAN 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 17327CAQ6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
IPG Photonics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics reported solid returns over the last few months and may actually be approaching a breakup point.

17327CAQ6 and IPG Photonics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 17327CAQ6 and IPG Photonics

The main advantage of trading using opposite 17327CAQ6 and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 17327CAQ6 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 C 3057 25 JAN 33 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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