Correlation Between Safran SA and Astronics

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

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

Diversification Opportunities for Safran SA and Astronics

-0.25

Correlation Coefficient

Safran SA  Astronics

Very good diversification

The 3 months correlation between Safran and Astronics is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and Safran SA 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 Safran SA are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of Safran SA i.e., Safran SA and Astronics go up and down completely randomly.

Pair Corralation between Safran SA and Astronics

Assuming the 90 days horizon Safran SA is expected to generate 0.41 times more return on investment than Astronics. However, Safran SA is 2.46 times less risky than Astronics. It trades about 0.13 of its potential returns per unit of risk. Astronics is currently generating about -0.08 per unit of risk. If you would invest  5,344  in Safran SA on September 4, 2024 and sell it today you would earn a total of  624.00  from holding Safran SA or generate 11.68% return on investment over 90 days.

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

Safran SA  vs.  Astronics

Safran SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safran SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Safran SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Astronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Safran SA and Astronics

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

The idea behind Safran SA and Astronics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.