Correlation Between GM and Precision Optics,
Can any of the company-specific risk be diversified away by investing in both GM and Precision Optics, 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 GM and Precision Optics, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Precision Optics,, you can compare the effects of market volatilities on GM and Precision Optics, 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 GM with a short position of Precision Optics,. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Precision Optics,.
Diversification Opportunities for GM and Precision Optics,
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Precision is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and GM 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 General Motors are associated (or correlated) with Precision Optics,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Optics, has no effect on the direction of GM i.e., GM and Precision Optics, go up and down completely randomly.
Pair Corralation between GM and Precision Optics,
Allowing for the 90-day total investment horizon GM is expected to generate 2.19 times less return on investment than Precision Optics,. But when comparing it to its historical volatility, General Motors is 2.39 times less risky than Precision Optics,. It trades about 0.32 of its potential returns per unit of risk. Precision Optics, is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 386.00 in Precision Optics, on August 28, 2024 and sell it today you would earn a total of 122.00 from holding Precision Optics, or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Precision Optics,
Performance |
| Timeline |
| General Motors |
| Precision Optics, |
GM and Precision Optics, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Precision Optics,
The main advantage of trading using opposite GM and Precision Optics, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Precision Optics, 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 Precision Optics, will offset losses from the drop in Precision Optics,'s long position.The idea behind General Motors and Precision Optics, 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.| Precision Optics, vs. Repro Med Systems | Precision Optics, vs. InfuSystems Holdings | Precision Optics, vs. Utah Medical Products | Precision Optics, vs. Milestone Scientific |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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