Correlation Between Airgain and Frequency Electronics
Can any of the company-specific risk be diversified away by investing in both Airgain and Frequency Electronics 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 Airgain and Frequency Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airgain and Frequency Electronics, you can compare the effects of market volatilities on Airgain and Frequency Electronics 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 Airgain with a short position of Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airgain and Frequency Electronics.
Diversification Opportunities for Airgain and Frequency Electronics
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Airgain and Frequency is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Airgain and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics and Airgain 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 Airgain are associated (or correlated) with Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of Airgain i.e., Airgain and Frequency Electronics go up and down completely randomly.
Pair Corralation between Airgain and Frequency Electronics
Given the investment horizon of 90 days Airgain is expected to generate 1.72 times more return on investment than Frequency Electronics. However, Airgain is 1.72 times more volatile than Frequency Electronics. It trades about 0.03 of its potential returns per unit of risk. Frequency Electronics is currently generating about -0.15 per unit of risk. If you would invest 682.00 in Airgain on November 3, 2024 and sell it today you would earn a total of 5.00 from holding Airgain or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airgain vs. Frequency Electronics
Performance |
| Timeline |
| Airgain |
| Frequency Electronics |
Airgain and Frequency Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airgain and Frequency Electronics
The main advantage of trading using opposite Airgain and Frequency Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airgain position performs unexpectedly, Frequency Electronics 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 Frequency Electronics will offset losses from the drop in Frequency Electronics' long position.The idea behind Airgain and Frequency Electronics 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.| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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