Correlation Between IPG Photonics and Ryde

Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Ryde 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 Ryde into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IPG Photonics and Ryde Group, you can compare the effects of market volatilities on IPG Photonics and Ryde 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 Ryde. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Ryde.

Diversification Opportunities for IPG Photonics and Ryde

-0.53

Correlation Coefficient

IPG Photonics  Ryde

Excellent diversification

The 3 months correlation between IPG and Ryde is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Ryde Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryde Group 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 Ryde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryde Group has no effect on the direction of IPG Photonics i.e., IPG Photonics and Ryde go up and down completely randomly.

Pair Corralation between IPG Photonics and Ryde

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Ryde. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 5.32 times less risky than Ryde. The stock trades about -0.05 of its potential returns per unit of risk. The Ryde Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Ryde Group on September 13, 2024 and sell it today you would lose (360.00) from holding Ryde Group or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	55.4%
Values	Daily Returns

IPG Photonics  vs.  Ryde Group

IPG Photonics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 8 (%) 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.

Ryde Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryde Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with IPG Photonics and Ryde

The main advantage of trading using opposite IPG Photonics and Ryde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Ryde 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 Ryde will offset losses from the drop in Ryde's long position.

The idea behind IPG Photonics and Ryde Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.