Correlation Between Meihua International and Precision Optics,

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

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

Diversification Opportunities for Meihua International and Precision Optics,

0.52

Correlation Coefficient

Meihua International  Precision Optics,

Very weak diversification

The 3 months correlation between Meihua and Precision is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and Meihua International 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 Meihua International Medical 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 Meihua International i.e., Meihua International and Precision Optics, go up and down completely randomly.

Pair Corralation between Meihua International and Precision Optics,

Given the investment horizon of 90 days Meihua International Medical is expected to under-perform the Precision Optics,. In addition to that, Meihua International is 1.8 times more volatile than Precision Optics,. It trades about -0.07 of its total potential returns per unit of risk. Precision Optics, is currently generating about -0.03 per unit of volatility. If you would invest  555.00  in Precision Optics, on September 2, 2024 and sell it today you would lose (73.00) from holding Precision Optics, or give up 13.15% of portfolio value over 90 days.

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

Meihua International Medical  vs.  Precision Optics,

Meihua International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meihua International Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Precision Optics,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision Optics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Meihua International and Precision Optics,

The main advantage of trading using opposite Meihua International and Precision Optics, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meihua International 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 Meihua International Medical 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.