Correlation Between Airtac International and Globaltek Fabrication

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

By analyzing existing cross correlation between Airtac International Group and Globaltek Fabrication Co, you can compare the effects of market volatilities on Airtac International and Globaltek Fabrication 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 Airtac International with a short position of Globaltek Fabrication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtac International and Globaltek Fabrication.

Diversification Opportunities for Airtac International and Globaltek Fabrication

0.79

Correlation Coefficient

Airtac International  Globaltek Fabrication

Poor diversification

The 3 months correlation between Airtac and Globaltek is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Airtac International Group and Globaltek Fabrication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globaltek Fabrication and Airtac International 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 Airtac International Group are associated (or correlated) with Globaltek Fabrication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globaltek Fabrication has no effect on the direction of Airtac International i.e., Airtac International and Globaltek Fabrication go up and down completely randomly.

Pair Corralation between Airtac International and Globaltek Fabrication

Assuming the 90 days trading horizon Airtac International Group is expected to under-perform the Globaltek Fabrication. But the stock apears to be less risky and, when comparing its historical volatility, Airtac International Group is 1.11 times less risky than Globaltek Fabrication. The stock trades about -0.11 of its potential returns per unit of risk. The Globaltek Fabrication Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  8,510  in Globaltek Fabrication Co on October 7, 2024 and sell it today you would lose (660.00) from holding Globaltek Fabrication Co or give up 7.76% of portfolio value over 90 days.

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

Airtac International Group  vs.  Globaltek Fabrication Co

Airtac International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airtac International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Globaltek Fabrication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globaltek Fabrication Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Airtac International and Globaltek Fabrication

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

The idea behind Airtac International Group and Globaltek Fabrication Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.