Correlation Between Universal Robina and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Universal Robina 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 Universal Robina and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Robina and IPG Photonics, you can compare the effects of market volatilities on Universal Robina 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 Universal Robina with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Robina and IPG Photonics.
Diversification Opportunities for Universal Robina and IPG Photonics
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and IPG is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Universal Robina and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Universal Robina 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 Universal Robina 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 Universal Robina i.e., Universal Robina and IPG Photonics go up and down completely randomly.
Pair Corralation between Universal Robina and IPG Photonics
Assuming the 90 days horizon Universal Robina is expected to under-perform the IPG Photonics. In addition to that, Universal Robina is 1.9 times more volatile than IPG Photonics. It trades about -0.22 of its total potential returns per unit of risk. IPG Photonics is currently generating about -0.01 per unit of volatility. If you would invest 8,057 in IPG Photonics on September 4, 2024 and sell it today you would lose (86.00) from holding IPG Photonics or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Robina vs. IPG Photonics
Performance |
| Timeline |
| Universal Robina |
| IPG Photonics |
Universal Robina and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Robina and IPG Photonics
The main advantage of trading using opposite Universal Robina and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Robina 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.| Universal Robina vs. Kellanova | Universal Robina vs. Lancaster Colony | Universal Robina vs. The A2 Milk | Universal Robina vs. Artisan Consumer Goods |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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