Correlation Between Austal and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both Austal and Alabama Aircraft 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 Austal and Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austal Limited and Alabama Aircraft Industries, you can compare the effects of market volatilities on Austal and Alabama Aircraft 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 Austal with a short position of Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austal and Alabama Aircraft.
Diversification Opportunities for Austal and Alabama Aircraft
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austal and Alabama is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Austal Limited and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind and Austal 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 Austal Limited are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of Austal i.e., Austal and Alabama Aircraft go up and down completely randomly.
Pair Corralation between Austal and Alabama Aircraft
Assuming the 90 days horizon Austal Limited is expected to generate 0.28 times more return on investment than Alabama Aircraft. However, Austal Limited is 3.53 times less risky than Alabama Aircraft. It trades about 0.04 of its potential returns per unit of risk. Alabama Aircraft Industries is currently generating about -0.15 per unit of risk. If you would invest 142.00 in Austal Limited on August 29, 2024 and sell it today you would earn a total of 64.00 from holding Austal Limited or generate 45.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.57% |
| Values | Daily Returns |
Austal Limited vs. Alabama Aircraft Industries
Performance |
| Timeline |
| Austal Limited |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Austal and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austal and Alabama Aircraft
The main advantage of trading using opposite Austal and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austal position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| Austal vs. 808 Renewable Energy | Austal vs. Sky Harbour Group | Austal vs. VirTra Inc | Austal vs. Firan Technology Group |
| Alabama Aircraft vs. KVH Industries | Alabama Aircraft vs. AerSale Corp | Alabama Aircraft vs. Zedge Inc | Alabama Aircraft vs. BCE Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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