Correlation Between Astronics and CPI Aerostructures

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

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

Diversification Opportunities for Astronics and CPI Aerostructures

-0.66

Correlation Coefficient

Astronics  CPI Aerostructures

Excellent diversification

The 3 months correlation between Astronics and CPI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures 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 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 Astronics i.e., Astronics and CPI Aerostructures go up and down completely randomly.

Pair Corralation between Astronics and CPI Aerostructures

Given the investment horizon of 90 days Astronics is expected to generate 0.85 times more return on investment than CPI Aerostructures. However, Astronics is 1.17 times less risky than CPI Aerostructures. It trades about 0.25 of its potential returns per unit of risk. CPI Aerostructures is currently generating about -0.04 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.  CPI Aerostructures

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.

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 Astronics and CPI Aerostructures

The main advantage of trading using opposite Astronics and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics 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 Astronics 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.