Correlation Between Precision Optics, and Skechers USA

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

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

Diversification Opportunities for Precision Optics, and Skechers USA

0.72

Correlation Coefficient

Precision Optics,  Skechers USA

Poor diversification

The 3 months correlation between Precision and Skechers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Precision Optics, i.e., Precision Optics, and Skechers USA go up and down completely randomly.

Pair Corralation between Precision Optics, and Skechers USA

Given the investment horizon of 90 days Precision Optics, is expected to generate 1.06 times more return on investment than Skechers USA. However, Precision Optics, is 1.06 times more volatile than Skechers USA. It trades about -0.05 of its potential returns per unit of risk. Skechers USA is currently generating about -0.09 per unit of risk. If you would invest  521.00  in Precision Optics, on December 20, 2024 and sell it today you would lose (50.00) from holding Precision Optics, or give up 9.6% 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.  Skechers USA

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.

Skechers USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Precision Optics, and Skechers USA

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

The idea behind Precision Optics, and Skechers USA 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.