Correlation Between Allient and Precision Optics,

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

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

Diversification Opportunities for Allient and Precision Optics,

0.83

Correlation Coefficient

Allient  Precision Optics,

Very poor diversification

The 3 months correlation between Allient and Precision is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and Allient 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 Allient 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 Allient i.e., Allient and Precision Optics, go up and down completely randomly.

Pair Corralation between Allient and Precision Optics,

Given the investment horizon of 90 days Allient is expected to under-perform the Precision Optics,. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 1.39 times less risky than Precision Optics,. The stock trades about -0.17 of its potential returns per unit of risk. The Precision Optics, is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Precision Optics, on October 10, 2024 and sell it today you would lose (8.00) from holding Precision Optics, or give up 1.6% of portfolio value over 90 days.

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

Allient  vs.  Precision Optics,

Allient

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Precision Optics,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 8 (%) 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 Allient and Precision Optics,

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.