Correlation Between Precision Optics, and Hoya Corp

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

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

Diversification Opportunities for Precision Optics, and Hoya Corp

0.76

Correlation Coefficient

Precision Optics,  Hoya Corp

Poor diversification

The 3 months correlation between Precision and Hoya is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Hoya Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoya Corp 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 Hoya Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoya Corp has no effect on the direction of Precision Optics, i.e., Precision Optics, and Hoya Corp go up and down completely randomly.

Pair Corralation between Precision Optics, and Hoya Corp

Given the investment horizon of 90 days Precision Optics, is expected to under-perform the Hoya Corp. In addition to that, Precision Optics, is 1.71 times more volatile than Hoya Corp. It trades about -0.08 of its total potential returns per unit of risk. Hoya Corp is currently generating about -0.07 per unit of volatility. If you would invest  12,525  in Hoya Corp on December 29, 2024 and sell it today you would lose (1,040) from holding Hoya Corp or give up 8.3% 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.  Hoya Corp

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 weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hoya Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hoya Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Precision Optics, and Hoya Corp

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

The idea behind Precision Optics, and Hoya Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.