Correlation Between Boston Beer and Precision Optics,

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

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

Diversification Opportunities for Boston Beer and Precision Optics,

0.5

Correlation Coefficient

Boston Beer  Precision Optics,

Very weak diversification

The 3 months correlation between Boston and Precision is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and Boston Beer 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 Boston Beer are associated (or correlated) with Precision Optics,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Optics, has no effect on the direction of Boston Beer i.e., Boston Beer and Precision Optics, go up and down completely randomly.

Pair Corralation between Boston Beer and Precision Optics,

Considering the 90-day investment horizon Boston Beer is expected to generate 1.54 times less return on investment than Precision Optics,. But when comparing it to its historical volatility, Boston Beer is 2.55 times less risky than Precision Optics,. It trades about 0.08 of its potential returns per unit of risk. Precision Optics, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  450.00  in Precision Optics, on October 7, 2024 and sell it today you would earn a total of  30.00  from holding Precision Optics, or generate 6.67% return on investment over 90 days.

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

Boston Beer  vs.  Precision Optics,

Boston Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Precision Optics,

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Precision Optics, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boston Beer and Precision Optics,

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

The idea behind Boston Beer and Precision Optics, 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.