Correlation Between Precision Optics, and Carl Zeiss

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

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

Diversification Opportunities for Precision Optics, and Carl Zeiss

-0.06

Correlation Coefficient

Precision Optics,  Carl Zeiss

Good diversification

The 3 months correlation between Precision and Carl is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec 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 Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Precision Optics, i.e., Precision Optics, and Carl Zeiss go up and down completely randomly.

Pair Corralation between Precision Optics, and Carl Zeiss

Given the investment horizon of 90 days Precision Optics, is expected to under-perform the Carl Zeiss. But the stock apears to be less risky and, when comparing its historical volatility, Precision Optics, is 1.55 times less risky than Carl Zeiss. The stock trades about -0.03 of its potential returns per unit of risk. The Carl Zeiss Meditec is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,122  in Carl Zeiss Meditec on December 1, 2024 and sell it today you would lose (109.00) from holding Carl Zeiss Meditec or give up 1.78% of portfolio value over 90 days.

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

Precision Optics,  vs.  Carl Zeiss Meditec

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 fairly strong fundamental indicators, Precision Optics, is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Carl Zeiss Meditec

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Precision Optics, and Carl Zeiss

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

The idea behind Precision Optics, and Carl Zeiss Meditec 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.