Correlation Between AstroNova and Nortech Systems
Can any of the company-specific risk be diversified away by investing in both AstroNova and Nortech Systems 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 AstroNova and Nortech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstroNova and Nortech Systems Incorporated, you can compare the effects of market volatilities on AstroNova and Nortech Systems 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 AstroNova with a short position of Nortech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstroNova and Nortech Systems.
Diversification Opportunities for AstroNova and Nortech Systems
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AstroNova and Nortech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AstroNova and Nortech Systems Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nortech Systems and AstroNova 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 AstroNova are associated (or correlated) with Nortech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nortech Systems has no effect on the direction of AstroNova i.e., AstroNova and Nortech Systems go up and down completely randomly.
Pair Corralation between AstroNova and Nortech Systems
Given the investment horizon of 90 days AstroNova is expected to under-perform the Nortech Systems. But the stock apears to be less risky and, when comparing its historical volatility, AstroNova is 1.33 times less risky than Nortech Systems. The stock trades about -0.04 of its potential returns per unit of risk. The Nortech Systems Incorporated is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,168 in Nortech Systems Incorporated on August 25, 2024 and sell it today you would lose (126.00) from holding Nortech Systems Incorporated or give up 10.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
AstroNova vs. Nortech Systems Incorporated
Performance |
| Timeline |
| AstroNova |
| Nortech Systems |
AstroNova and Nortech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstroNova and Nortech Systems
The main advantage of trading using opposite AstroNova and Nortech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstroNova position performs unexpectedly, Nortech Systems 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 Nortech Systems will offset losses from the drop in Nortech Systems' long position.| AstroNova vs. Key Tronic | AstroNova vs. Identiv | AstroNova vs. Red Cat Holdings | AstroNova vs. TransAct Technologies Incorporated |
| Nortech Systems vs. Neuropace | Nortech Systems vs. Electromed | Nortech Systems vs. Orthopediatrics Corp | Nortech Systems vs. SurModics |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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