Correlation Between Astronics and Air Industries

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

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

Diversification Opportunities for Astronics and Air Industries

-0.69

Correlation Coefficient

Astronics  Air Industries

Excellent diversification

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

Pair Corralation between Astronics and Air Industries

Given the investment horizon of 90 days Astronics is expected to generate 1.21 times more return on investment than Air Industries. However, Astronics is 1.21 times more volatile than Air Industries Group. It trades about 0.25 of its potential returns per unit of risk. Air Industries Group is currently generating about -0.05 per unit of risk. 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

Astronics  vs.  Air Industries Group

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.

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.

Pair Trading with Astronics and Air Industries

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

The idea behind Astronics and Air Industries Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.