Correlation Between Planet Labs and Air Industries

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

By analyzing existing cross correlation between Planet Labs PBC and Air Industries Group, you can compare the effects of market volatilities on Planet Labs and Air Industries 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 Planet Labs with a short position of Air Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and Air Industries.

Diversification Opportunities for Planet Labs and Air Industries

-0.88

Correlation Coefficient

Planet Labs  Air Industries

Pay attention - limited upside

The 3 months correlation between Planet and Air is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Air Industries Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Industries Group and Planet Labs 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 Planet Labs PBC are associated (or correlated) with Air Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Industries Group has no effect on the direction of Planet Labs i.e., Planet Labs and Air Industries go up and down completely randomly.

Pair Corralation between Planet Labs and Air Industries

Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 1.89 times more return on investment than Air Industries. However, Planet Labs is 1.89 times more volatile than Air Industries Group. It trades about 0.1 of its potential returns per unit of risk. Air Industries Group is currently generating about -0.28 per unit of risk. If you would invest  378.00  in Planet Labs PBC on September 26, 2024 and sell it today you would earn a total of  30.00  from holding Planet Labs PBC or generate 7.94% return on investment over 90 days.

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

Planet Labs PBC  vs.  Air Industries Group

Planet Labs PBC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Planet Labs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Air Industries Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Industries Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Planet Labs and Air Industries

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

The idea behind Planet Labs PBC and Air Industries 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.