Correlation Between Precision Optics, and Nexgel

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

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

Diversification Opportunities for Precision Optics, and Nexgel

0.59

Correlation Coefficient

Precision Optics,  Nexgel

Very weak diversification

The 3 months correlation between Precision and Nexgel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Nexgel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexgel Inc 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 Nexgel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexgel Inc has no effect on the direction of Precision Optics, i.e., Precision Optics, and Nexgel go up and down completely randomly.

Pair Corralation between Precision Optics, and Nexgel

Given the investment horizon of 90 days Precision Optics, is expected to generate 0.66 times more return on investment than Nexgel. However, Precision Optics, is 1.53 times less risky than Nexgel. It trades about -0.08 of its potential returns per unit of risk. Nexgel Inc is currently generating about -0.14 per unit of risk. If you would invest  493.00  in Precision Optics, on December 30, 2024 and sell it today you would lose (80.00) from holding Precision Optics, or give up 16.23% of portfolio value over 90 days.

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

Precision Optics,  vs.  Nexgel Inc

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 unsteady 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.

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Precision Optics, and Nexgel

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

The idea behind Precision Optics, and Nexgel Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.