Correlation Between Astronics and Byrna Technologies

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

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

Diversification Opportunities for Astronics and Byrna Technologies

-0.85

Correlation Coefficient

Astronics  Byrna Technologies

Pay attention - limited upside

The 3 months correlation between Astronics and Byrna is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and Byrna Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byrna Technologies 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 Byrna Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byrna Technologies has no effect on the direction of Astronics i.e., Astronics and Byrna Technologies go up and down completely randomly.

Pair Corralation between Astronics and Byrna Technologies

Given the investment horizon of 90 days Astronics is expected to generate 0.71 times more return on investment than Byrna Technologies. However, Astronics is 1.41 times less risky than Byrna Technologies. It trades about 0.22 of its potential returns per unit of risk. Byrna Technologies is currently generating about -0.16 per unit of risk. If you would invest  1,580  in Astronics on December 29, 2024 and sell it today you would earn a total of  887.00  from holding Astronics or generate 56.14% return on investment over 90 days.

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

Astronics  vs.  Byrna Technologies

Astronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 17 (%) 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.

Byrna Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Byrna Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Astronics and Byrna Technologies

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

The idea behind Astronics and Byrna Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.