Correlation Between Austal and Astronics Corp

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

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

Diversification Opportunities for Austal and Astronics Corp

-0.31

Correlation Coefficient

Austal  Astronics Corp

Very good diversification

The 3 months correlation between Austal and Astronics is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Austal Limited and Astronics Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics Corp Cl and Austal 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 Austal Limited are associated (or correlated) with Astronics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics Corp Cl has no effect on the direction of Austal i.e., Austal and Astronics Corp go up and down completely randomly.

Pair Corralation between Austal and Astronics Corp

Assuming the 90 days horizon Austal Limited is expected to generate 1.22 times more return on investment than Astronics Corp. However, Austal is 1.22 times more volatile than Astronics Corp Cl. It trades about 0.11 of its potential returns per unit of risk. Astronics Corp Cl is currently generating about -0.04 per unit of risk. If you would invest  147.00  in Austal Limited on September 12, 2024 and sell it today you would earn a total of  43.00  from holding Austal Limited or generate 29.25% return on investment over 90 days.

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

Austal Limited  vs.  Astronics Corp Cl

Austal Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austal Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Austal reported solid returns over the last few months and may actually be approaching a breakup point.

Astronics Corp Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics Corp Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Austal and Astronics Corp

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

The idea behind Austal Limited and Astronics Corp Cl 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.