Correlation Between Addus HomeCare and Precision Optics,

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

By analyzing existing cross correlation between Addus HomeCare and Precision Optics,, you can compare the effects of market volatilities on Addus HomeCare 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 Addus HomeCare with a short position of Precision Optics,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Precision Optics,.

Diversification Opportunities for Addus HomeCare and Precision Optics,

-0.33

Correlation Coefficient

Addus HomeCare  Precision Optics,

Very good diversification

The 3 months correlation between Addus and Precision is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare i.e., Addus HomeCare and Precision Optics, go up and down completely randomly.

Pair Corralation between Addus HomeCare and Precision Optics,

Given the investment horizon of 90 days Addus HomeCare is expected to generate 7.11 times less return on investment than Precision Optics,. But when comparing it to its historical volatility, Addus HomeCare is 2.12 times less risky than Precision Optics,. It trades about 0.04 of its potential returns per unit of risk. Precision Optics, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  386.00  in Precision Optics, on October 26, 2024 and sell it today you would earn a total of  115.00  from holding Precision Optics, or generate 29.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addus HomeCare  vs.  Precision Optics,

Addus HomeCare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Precision Optics,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Precision Optics, demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and Precision Optics,

The main advantage of trading using opposite Addus HomeCare and Precision Optics, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare 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 Addus HomeCare 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.