Correlation Between Tel Instrument and CPI Aerostructures

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

By analyzing existing cross correlation between Tel Instrument Electronics Corp and CPI Aerostructures, you can compare the effects of market volatilities on Tel Instrument and CPI Aerostructures 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 Tel Instrument with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Instrument and CPI Aerostructures.

Diversification Opportunities for Tel Instrument and CPI Aerostructures

0.15

Correlation Coefficient

Tel Instrument  CPI Aerostructures

Average diversification

The 3 months correlation between Tel and CPI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tel Instrument Electronics Cor and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and Tel Instrument 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 Tel Instrument Electronics Corp are associated (or correlated) with CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Tel Instrument i.e., Tel Instrument and CPI Aerostructures go up and down completely randomly.

Pair Corralation between Tel Instrument and CPI Aerostructures

If you would invest  231.00  in CPI Aerostructures on September 12, 2024 and sell it today you would earn a total of  132.00  from holding CPI Aerostructures or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

Tel Instrument Electronics Cor  vs.  CPI Aerostructures

Tel Instrument Elect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tel Instrument Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tel Instrument is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

CPI Aerostructures

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CPI Aerostructures are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CPI Aerostructures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tel Instrument and CPI Aerostructures

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

The idea behind Tel Instrument Electronics Corp and CPI Aerostructures 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.