Correlation Between Lockheed Martin and AviChina Industry

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

By analyzing existing cross correlation between Lockheed Martin and AviChina Industry Technology, you can compare the effects of market volatilities on Lockheed Martin and AviChina Industry 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 Lockheed Martin with a short position of AviChina Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and AviChina Industry.

Diversification Opportunities for Lockheed Martin and AviChina Industry

0.78

Correlation Coefficient

Lockheed Martin  AviChina Industry

Poor diversification

The 3 months correlation between Lockheed and AviChina is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and AviChina Industry Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AviChina Industry and Lockheed Martin 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 Lockheed Martin are associated (or correlated) with AviChina Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AviChina Industry has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and AviChina Industry go up and down completely randomly.

Pair Corralation between Lockheed Martin and AviChina Industry

If you would invest  37.00  in AviChina Industry Technology on September 23, 2024 and sell it today you would earn a total of  0.00  from holding AviChina Industry Technology or generate 0.0% return on investment over 90 days.

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

Lockheed Martin  vs.  AviChina Industry Technology

Lockheed Martin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary 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.

AviChina Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AviChina Industry Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lockheed Martin and AviChina Industry

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

The idea behind Lockheed Martin and AviChina Industry Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.