Correlation Between Air Industries and L3Harris Technologies

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Can any of the company-specific risk be diversified away by investing in both Air Industries and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Air Industries and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Industries and L3Harris Technologies.

Diversification Opportunities for Air Industries and L3Harris Technologies

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Air Industries and L3Harris is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Air Industries i.e., Air Industries and L3Harris Technologies go up and down completely randomly.

Pair Corralation between Air Industries and L3Harris Technologies

Given the investment horizon of 90 days Air Industries is expected to generate 1.07 times less return on investment than L3Harris Technologies. In addition to that, Air Industries is 2.58 times more volatile than L3Harris Technologies. It trades about 0.07 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about 0.19 per unit of volatility. If you would invest  22,564  in L3Harris Technologies on May 20, 2022 and sell it today you would earn a total of  1,424  from holding L3Harris Technologies or generate 6.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Air Industries Group  vs.  L3Harris Technologies

 Performance (%) 
       Timeline  
Air Industries Group 
Air Industries Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Air Industries Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Air Industries Price Channel

L3Harris Technologies 
L3Harris Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in L3Harris Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

L3Harris Price Channel

Air Industries and L3Harris Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Industries and L3Harris Technologies

The main advantage of trading using opposite Air Industries and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.
The idea behind Air Industries Group and L3Harris Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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