Correlation Between Astrotech Corp and CPI Aerostructures

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

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

Diversification Opportunities for Astrotech Corp and CPI Aerostructures

0.47

Correlation Coefficient

Astrotech Corp  CPI Aerostructures

Very weak diversification

The 3 months correlation between Astrotech and CPI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Astrotech Corp and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures 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 CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Astrotech Corp i.e., Astrotech Corp and CPI Aerostructures go up and down completely randomly.

Pair Corralation between Astrotech Corp and CPI Aerostructures

Given the investment horizon of 90 days Astrotech Corp is expected to generate 0.69 times more return on investment than CPI Aerostructures. However, Astrotech Corp is 1.44 times less risky than CPI Aerostructures. It trades about -0.04 of its potential returns per unit of risk. CPI Aerostructures is currently generating about -0.04 per unit of risk. If you would invest  699.00  in Astrotech Corp on December 28, 2024 and sell it today you would lose (67.00) from holding Astrotech Corp or give up 9.59% of portfolio value over 90 days.

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

Astrotech Corp  vs.  CPI Aerostructures

Astrotech Corp

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CPI Aerostructures

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPI Aerostructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Astrotech Corp and CPI Aerostructures

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

The idea behind Astrotech Corp and CPI Aerostructures 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.