Correlation Between CPI Aerostructures and Safe Pro

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

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

Diversification Opportunities for CPI Aerostructures and Safe Pro

-0.37

Correlation Coefficient

CPI Aerostructures  Safe Pro

Very good diversification

The 3 months correlation between CPI and Safe is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Safe Pro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Pro Group 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 Safe Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Pro Group has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Safe Pro go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Safe Pro

Considering the 90-day investment horizon CPI Aerostructures is expected to under-perform the Safe Pro. But the stock apears to be less risky and, when comparing its historical volatility, CPI Aerostructures is 2.77 times less risky than Safe Pro. The stock trades about -0.04 of its potential returns per unit of risk. The Safe Pro Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Safe Pro Group on December 17, 2024 and sell it today you would lose (59.00) from holding Safe Pro Group or give up 15.57% of portfolio value over 90 days.

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

CPI Aerostructures  vs.  Safe Pro Group

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.

Safe Pro Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Safe Pro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPI Aerostructures and Safe Pro

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

The idea behind CPI Aerostructures and Safe Pro 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.