Correlation Between Precision Optics, and Aegon Funding

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

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

Diversification Opportunities for Precision Optics, and Aegon Funding

-0.24

Correlation Coefficient

Precision Optics,  Aegon Funding

Very good diversification

The 3 months correlation between Precision and Aegon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Aegon Funding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon Funding and Precision Optics, 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 Precision Optics, are associated (or correlated) with Aegon Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon Funding has no effect on the direction of Precision Optics, i.e., Precision Optics, and Aegon Funding go up and down completely randomly.

Pair Corralation between Precision Optics, and Aegon Funding

Given the investment horizon of 90 days Precision Optics, is expected to under-perform the Aegon Funding. In addition to that, Precision Optics, is 2.04 times more volatile than Aegon Funding. It trades about -0.01 of its total potential returns per unit of risk. Aegon Funding is currently generating about 0.12 per unit of volatility. If you would invest  2,034  in Aegon Funding on October 27, 2024 and sell it today you would earn a total of  58.00  from holding Aegon Funding or generate 2.85% return on investment over 90 days.

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

Precision Optics,  vs.  Aegon Funding

Precision Optics,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 11 (%) 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.

Aegon Funding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon Funding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aegon Funding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Precision Optics, and Aegon Funding

The main advantage of trading using opposite Precision Optics, and Aegon Funding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Optics, position performs unexpectedly, Aegon Funding 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 Aegon Funding will offset losses from the drop in Aegon Funding's long position.

The idea behind Precision Optics, and Aegon Funding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.