Correlation Between Air Industries and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Air Industries and Park Electrochemical 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 Air Industries and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Industries Group and Park Electrochemical, you can compare the effects of market volatilities on Air Industries and Park Electrochemical 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 Air Industries with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Industries and Park Electrochemical.
Diversification Opportunities for Air Industries and Park Electrochemical
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Park is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Air Industries 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 Air Industries Group are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Air Industries i.e., Air Industries and Park Electrochemical go up and down completely randomly.
Pair Corralation between Air Industries and Park Electrochemical
Given the investment horizon of 90 days Air Industries Group is expected to under-perform the Park Electrochemical. In addition to that, Air Industries is 2.16 times more volatile than Park Electrochemical. It trades about -0.27 of its total potential returns per unit of risk. Park Electrochemical is currently generating about 0.08 per unit of volatility. If you would invest 1,453 in Park Electrochemical on August 23, 2024 and sell it today you would earn a total of 50.00 from holding Park Electrochemical or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Industries Group vs. Park Electrochemical
Performance |
| Timeline |
| Air Industries Group |
| Park Electrochemical |
Air Industries and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Industries and Park Electrochemical
The main advantage of trading using opposite Air Industries and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Air Industries vs. SIFCO Industries | Air Industries vs. CPI Aerostructures | Air Industries vs. VSE Corporation | Air Industries vs. National Presto Industries |
| Park Electrochemical vs. Small Cap Core | Park Electrochemical vs. Freedom Holding Corp | Park Electrochemical vs. Gfl Environmental Holdings | Park Electrochemical vs. Growth Fund Of |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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