Correlation Between Air Industries and Sigma Lithium

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

Diversification Opportunities for Air Industries and Sigma Lithium

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Air Industries and Sigma is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Air Industries i.e., Air Industries and Sigma Lithium go up and down completely randomly.

Pair Corralation between Air Industries and Sigma Lithium

Given the investment horizon of 90 days Air Industries Group is expected to under-perform the Sigma Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Air Industries Group is 1.38 times less risky than Sigma Lithium. The stock trades about -0.04 of its potential returns per unit of risk. The Sigma Lithium Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  869.00  in Sigma Lithium Resources on September 2, 2022 and sell it today you would earn a total of  2,561  from holding Sigma Lithium Resources or generate 294.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Air Industries Group  vs.  Sigma Lithium Resources

 Performance (%) 
       Timeline  
Air Industries Group 
Air Industries Performance
0 of 100
Over the last 90 days Air Industries Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Air Industries Price Channel

Sigma Lithium Resources 
Sigma Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sigma Lithium Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Sigma Lithium revealed solid returns over the last few months and may actually be approaching a breakup point.

Sigma Price Channel

Air Industries and Sigma Lithium Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Industries and Sigma Lithium

The main advantage of trading using opposite Air Industries and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, Sigma Lithium 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.
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The idea behind Air Industries Group and Sigma Lithium Resources 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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