Correlation Between Precision Optics, and Boston Properties

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

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

Diversification Opportunities for Precision Optics, and Boston Properties

0.7

Correlation Coefficient

Precision Optics,  Boston Properties

Poor diversification

The 3 months correlation between Precision and Boston is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of Precision Optics, i.e., Precision Optics, and Boston Properties go up and down completely randomly.

Pair Corralation between Precision Optics, and Boston Properties

Given the investment horizon of 90 days Precision Optics, is expected to under-perform the Boston Properties. In addition to that, Precision Optics, is 1.39 times more volatile than Boston Properties. It trades about -0.05 of its total potential returns per unit of risk. Boston Properties is currently generating about -0.05 per unit of volatility. If you would invest  7,365  in Boston Properties on December 20, 2024 and sell it today you would lose (479.00) from holding Boston Properties or give up 6.5% of portfolio value over 90 days.

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

Precision Optics,  vs.  Boston Properties

Precision Optics,

Risk-Adjusted Performance

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.

Boston Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Precision Optics, and Boston Properties

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

The idea behind Precision Optics, and Boston Properties 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.