Correlation Between Top Glove and Precision Optics,

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

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

Diversification Opportunities for Top Glove and Precision Optics,

0.09

Correlation Coefficient

Top Glove  Precision Optics,

Significant diversification

The 3 months correlation between Top and Precision is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Precision Optics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics, and Top Glove 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 Top Glove 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 Top Glove i.e., Top Glove and Precision Optics, go up and down completely randomly.

Pair Corralation between Top Glove and Precision Optics,

Assuming the 90 days horizon Top Glove is expected to generate 3.4 times more return on investment than Precision Optics,. However, Top Glove is 3.4 times more volatile than Precision Optics,. It trades about 0.06 of its potential returns per unit of risk. Precision Optics, is currently generating about 0.01 per unit of risk. If you would invest  18.00  in Top Glove on September 26, 2024 and sell it today you would earn a total of  13.00  from holding Top Glove or generate 72.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Top Glove  vs.  Precision Optics,

Top Glove

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Top Glove are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Top Glove reported solid returns over the last few months and may actually be approaching a breakup point.

Precision Optics,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision Optics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Top Glove and Precision Optics,

The main advantage of trading using opposite Top Glove and Precision Optics, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove 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 Top Glove 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.