Correlation Between FitLife Brands, and Precision Optics,

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

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

Diversification Opportunities for FitLife Brands, and Precision Optics,

0.31

Correlation Coefficient

FitLife Brands,  Precision Optics,

Weak diversification

The 3 months correlation between FitLife and Precision is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Precision Optics, go up and down completely randomly.

Pair Corralation between FitLife Brands, and Precision Optics,

Given the investment horizon of 90 days FitLife Brands, Common is expected to generate 0.87 times more return on investment than Precision Optics,. However, FitLife Brands, Common is 1.15 times less risky than Precision Optics,. It trades about 0.07 of its potential returns per unit of risk. Precision Optics, is currently generating about -0.01 per unit of risk. If you would invest  1,984  in FitLife Brands, Common on October 9, 2024 and sell it today you would earn a total of  1,055  from holding FitLife Brands, Common or generate 53.18% return on investment over 90 days.

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

FitLife Brands, Common  vs.  Precision Optics,

FitLife Brands, Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FitLife Brands, Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, FitLife Brands, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Precision Optics,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 5 (%) 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 FitLife Brands, and Precision Optics,

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