Correlation Between Spirit Aerosystems and Tat Techno

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

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

Diversification Opportunities for Spirit Aerosystems and Tat Techno

-0.48

Correlation Coefficient

Spirit Aerosystems  Tat Techno

Very good diversification

The 3 months correlation between Spirit and Tat is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Aerosystems Holdings and Tat Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tat Techno and Spirit Aerosystems 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 Spirit Aerosystems Holdings are associated (or correlated) with Tat Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tat Techno has no effect on the direction of Spirit Aerosystems i.e., Spirit Aerosystems and Tat Techno go up and down completely randomly.

Pair Corralation between Spirit Aerosystems and Tat Techno

Considering the 90-day investment horizon Spirit Aerosystems Holdings is expected to under-perform the Tat Techno. But the stock apears to be less risky and, when comparing its historical volatility, Spirit Aerosystems Holdings is 2.04 times less risky than Tat Techno. The stock trades about -0.02 of its potential returns per unit of risk. The Tat Techno is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,663  in Tat Techno on September 2, 2024 and sell it today you would earn a total of  615.00  from holding Tat Techno or generate 36.98% return on investment over 90 days.

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

Spirit Aerosystems Holdings  vs.  Tat Techno

Spirit Aerosystems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirit Aerosystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Spirit Aerosystems is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Tat Techno

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tat Techno are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Tat Techno unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spirit Aerosystems and Tat Techno

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

The idea behind Spirit Aerosystems Holdings and Tat Techno 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.