Correlation Between Kratos Defense and Astra Space

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

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

Diversification Opportunities for Kratos Defense and Astra Space

0.0

Correlation Coefficient

Kratos Defense  Astra Space

Pay attention - limited upside

The 3 months correlation between Kratos and Astra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Astra Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Space and Kratos Defense 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 Kratos Defense Security are associated (or correlated) with Astra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Space has no effect on the direction of Kratos Defense i.e., Kratos Defense and Astra Space go up and down completely randomly.

Pair Corralation between Kratos Defense and Astra Space

If you would invest  2,723  in Kratos Defense Security on October 10, 2024 and sell it today you would earn a total of  138.00  from holding Kratos Defense Security or generate 5.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Kratos Defense Security  vs.  Astra Space

Kratos Defense Security

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Astra Space

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Space has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Astra Space is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kratos Defense and Astra Space

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

The idea behind Kratos Defense Security and Astra Space 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.