Correlation Between Astrotech Corp and Coherent

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

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

Diversification Opportunities for Astrotech Corp and Coherent

-0.46

Correlation Coefficient

Astrotech Corp  Coherent

Very good diversification

The 3 months correlation between Astrotech and Coherent is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Astrotech Corp and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Astrotech Corp 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 Astrotech Corp are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Astrotech Corp i.e., Astrotech Corp and Coherent go up and down completely randomly.

Pair Corralation between Astrotech Corp and Coherent

Given the investment horizon of 90 days Astrotech Corp is expected to generate 0.85 times more return on investment than Coherent. However, Astrotech Corp is 1.18 times less risky than Coherent. It trades about -0.06 of its potential returns per unit of risk. Coherent is currently generating about -0.09 per unit of risk. If you would invest  761.00  in Astrotech Corp on September 22, 2024 and sell it today you would lose (34.00) from holding Astrotech Corp or give up 4.47% of portfolio value over 90 days.

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

Astrotech Corp  vs.  Coherent

Astrotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Coherent

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astrotech Corp and Coherent

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

The idea behind Astrotech Corp and Coherent 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.