Correlation Between AeroSpace Technology and People Technology

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

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

Diversification Opportunities for AeroSpace Technology and People Technology

0.56

Correlation Coefficient

AeroSpace Technology  People Technology

Very weak diversification

The 3 months correlation between AeroSpace and People is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding AeroSpace Technology of and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology and AeroSpace Technology 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 AeroSpace Technology of are associated (or correlated) with People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of AeroSpace Technology i.e., AeroSpace Technology and People Technology go up and down completely randomly.

Pair Corralation between AeroSpace Technology and People Technology

Assuming the 90 days trading horizon AeroSpace Technology of is expected to generate 0.72 times more return on investment than People Technology. However, AeroSpace Technology of is 1.38 times less risky than People Technology. It trades about 0.49 of its potential returns per unit of risk. People Technology is currently generating about 0.03 per unit of risk. If you would invest  50,800  in AeroSpace Technology of on October 20, 2024 and sell it today you would earn a total of  9,100  from holding AeroSpace Technology of or generate 17.91% return on investment over 90 days.

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

AeroSpace Technology of  vs.  People Technology

AeroSpace Technology

Risk-Adjusted Performance

5 of 100

Modest

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

People Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days People Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AeroSpace Technology and People Technology

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

The idea behind AeroSpace Technology of and People 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.