Correlation Between Air Industries and Astronics

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

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

Diversification Opportunities for Air Industries and Astronics

-0.69

Correlation Coefficient

Air Industries  Astronics

Excellent diversification

The 3 months correlation between Air and Astronics is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and Air Industries 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 Air Industries Group are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of Air Industries i.e., Air Industries and Astronics go up and down completely randomly.

Pair Corralation between Air Industries and Astronics

Given the investment horizon of 90 days Air Industries Group is expected to under-perform the Astronics. But the stock apears to be less risky and, when comparing its historical volatility, Air Industries Group is 1.21 times less risky than Astronics. The stock trades about -0.05 of its potential returns per unit of risk. The Astronics is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,580  in Astronics on December 28, 2024 and sell it today you would earn a total of  1,021  from holding Astronics or generate 64.62% return on investment over 90 days.

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

Air Industries Group  vs.  Astronics

Air Industries Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Industries Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Astronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Astronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Industries and Astronics

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

The idea behind Air Industries Group and Astronics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.