Correlation Between Repro Med and Precision Optics

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

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

Diversification Opportunities for Repro Med and Precision Optics

-0.07

Correlation Coefficient

Repro Med  Precision Optics

Good diversification

The 3 months correlation between Repro and Precision is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Repro Med Systems and Precision Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Optics and Repro Med 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 Repro Med Systems 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 Repro Med i.e., Repro Med and Precision Optics go up and down completely randomly.

Pair Corralation between Repro Med and Precision Optics

Given the investment horizon of 90 days Repro Med Systems is expected to generate 0.69 times more return on investment than Precision Optics. However, Repro Med Systems is 1.45 times less risky than Precision Optics. It trades about 0.06 of its potential returns per unit of risk. Precision Optics is currently generating about 0.04 per unit of risk. If you would invest  224.00  in Repro Med Systems on March 14, 2024 and sell it today you would earn a total of  6.00  from holding Repro Med Systems or generate 2.68% return on investment over 90 days.

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

Repro Med Systems  vs.  Precision Optics

Repro Med Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Repro Med Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Repro Med may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Precision Optics

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Optics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Precision Optics may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Repro Med and Precision Optics

The main advantage of trading using opposite Repro Med and Precision Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repro Med 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' long position.

The idea behind Repro Med Systems 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.