Correlation Between Precision Optics, and Senmiao Technology

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

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

Diversification Opportunities for Precision Optics, and Senmiao Technology

0.21

Correlation Coefficient

Precision Optics,  Senmiao Technology

Modest diversification

The 3 months correlation between Precision and Senmiao is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Precision Optics, and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology 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 Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of Precision Optics, i.e., Precision Optics, and Senmiao Technology go up and down completely randomly.

Pair Corralation between Precision Optics, and Senmiao Technology

Given the investment horizon of 90 days Precision Optics, is expected to generate 0.8 times more return on investment than Senmiao Technology. However, Precision Optics, is 1.26 times less risky than Senmiao Technology. It trades about 0.22 of its potential returns per unit of risk. Senmiao Technology is currently generating about 0.04 per unit of risk. If you would invest  404.00  in Precision Optics, on February 11, 2025 and sell it today you would earn a total of  59.00  from holding Precision Optics, or generate 14.6% return on investment over 90 days.

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

Precision Optics,  vs.  Senmiao Technology

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 fairly strong fundamental indicators, Precision Optics, is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Senmiao Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Senmiao Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, Senmiao Technology may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Precision Optics, and Senmiao Technology

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

The idea behind Precision Optics, and Senmiao Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.