Correlation Between Astrotech Corp and Air Industries

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

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

Diversification Opportunities for Astrotech Corp and Air Industries

0.23

Correlation Coefficient

Astrotech Corp  Air Industries

Modest diversification

The 3 months correlation between Astrotech and Air is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Astrotech Corp 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 Astrotech Corp 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 Astrotech Corp 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 Astrotech Corp i.e., Astrotech Corp and Air Industries go up and down completely randomly.

Pair Corralation between Astrotech Corp and Air Industries

Given the investment horizon of 90 days Astrotech Corp is expected to under-perform the Air Industries. But the stock apears to be less risky and, when comparing its historical volatility, Astrotech Corp is 1.35 times less risky than Air Industries. The stock trades about -0.15 of its potential returns per unit of risk. The Air Industries Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Air Industries Group on September 2, 2024 and sell it today you would lose (210.00) from holding Air Industries Group or give up 31.11% of portfolio value over 90 days.

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

Astrotech Corp  vs.  Air Industries Group

Astrotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astrotech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Astrotech Corp and Air Industries

The main advantage of trading using opposite Astrotech Corp and Air Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astrotech Corp 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 Astrotech Corp 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 CEOs Directory module to screen CEOs from public companies around the world.