Correlation Between Howmet Aerospace and Sidus Space

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

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

Diversification Opportunities for Howmet Aerospace and Sidus Space

-0.85

Correlation Coefficient

Howmet Aerospace  Sidus Space

Pay attention - limited upside

The 3 months correlation between Howmet and Sidus is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Howmet Aerospace and Sidus Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidus Space and Howmet Aerospace 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 Howmet Aerospace are associated (or correlated) with Sidus Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidus Space has no effect on the direction of Howmet Aerospace i.e., Howmet Aerospace and Sidus Space go up and down completely randomly.

Pair Corralation between Howmet Aerospace and Sidus Space

Considering the 90-day investment horizon Howmet Aerospace is expected to generate 0.27 times more return on investment than Sidus Space. However, Howmet Aerospace is 3.66 times less risky than Sidus Space. It trades about 0.18 of its potential returns per unit of risk. Sidus Space is currently generating about -0.07 per unit of risk. If you would invest  9,428  in Howmet Aerospace on September 4, 2024 and sell it today you would earn a total of  2,341  from holding Howmet Aerospace or generate 24.83% return on investment over 90 days.

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

Howmet Aerospace  vs.  Sidus Space

Howmet Aerospace

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Howmet Aerospace are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Howmet Aerospace displayed solid returns over the last few months and may actually be approaching a breakup point.

Sidus Space

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidus Space has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Howmet Aerospace and Sidus Space

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

The idea behind Howmet Aerospace and Sidus 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.