Correlation Between CPI Aerostructures and Astronics

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

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

Diversification Opportunities for CPI Aerostructures and Astronics

-0.58

Correlation Coefficient

CPI Aerostructures  Astronics

Excellent diversification

The 3 months correlation between CPI and Astronics is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and CPI Aerostructures 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 CPI Aerostructures are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Astronics go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Astronics

Considering the 90-day investment horizon CPI Aerostructures is expected to under-perform the Astronics. In addition to that, CPI Aerostructures is 1.17 times more volatile than Astronics. It trades about -0.01 of its total potential returns per unit of risk. Astronics is currently generating about 0.25 per unit of volatility. If you would invest  1,614  in Astronics on December 25, 2024 and sell it today you would earn a total of  1,026  from holding Astronics or generate 63.57% return on investment over 90 days.

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

CPI Aerostructures  vs.  Astronics

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 comparatively stable basic indicators, CPI Aerostructures is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with CPI Aerostructures and Astronics

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

The idea behind CPI Aerostructures and Astronics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.