Correlation Between Inrad Optics and Micropac Industries

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

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

Diversification Opportunities for Inrad Optics and Micropac Industries

0.0

Correlation Coefficient

Inrad Optics  Micropac Industries

Pay attention - limited upside

The 3 months correlation between Inrad and Micropac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Inrad Optics and Micropac Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micropac Industries and Inrad 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 Inrad Optics are associated (or correlated) with Micropac Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micropac Industries has no effect on the direction of Inrad Optics i.e., Inrad Optics and Micropac Industries go up and down completely randomly.

Pair Corralation between Inrad Optics and Micropac Industries

If you would invest  1,400  in Micropac Industries on October 1, 2024 and sell it today you would earn a total of  595.00  from holding Micropac Industries or generate 42.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Inrad Optics  vs.  Micropac Industries

Inrad Optics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inrad Optics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Inrad Optics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Micropac Industries

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Micropac Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Micropac Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inrad Optics and Micropac Industries

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

The idea behind Inrad Optics and Micropac Industries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.