Correlation Between Astra Space and Eve Holding

Can any of the company-specific risk be diversified away by investing in both Astra Space and Eve Holding 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 Astra Space and Eve Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astra Space and Eve Holding, you can compare the effects of market volatilities on Astra Space and Eve Holding 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 Astra Space with a short position of Eve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Space and Eve Holding.

Diversification Opportunities for Astra Space and Eve Holding

0.01

Correlation Coefficient

Astra Space  Eve Holding

Significant diversification

The 3 months correlation between Astra and Eve is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Astra Space and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding and Astra Space 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 Astra Space are associated (or correlated) with Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Astra Space i.e., Astra Space and Eve Holding go up and down completely randomly.

Pair Corralation between Astra Space and Eve Holding

Given the investment horizon of 90 days Astra Space is expected to under-perform the Eve Holding. In addition to that, Astra Space is 2.11 times more volatile than Eve Holding. It trades about -0.04 of its total potential returns per unit of risk. Eve Holding is currently generating about -0.04 per unit of volatility. If you would invest  979.00  in Eve Holding on July 12, 2024 and sell it today you would lose (654.00) from holding Eve Holding or give up 66.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.48%
Values	Daily Returns

Astra Space  vs.  Eve Holding

Astra Space

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Astra Space has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unsteady basic indicators, Astra Space reported solid returns over the last few months and may actually be approaching a breakup point.

Eve Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eve Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Astra Space and Eve Holding

The main advantage of trading using opposite Astra Space and Eve Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Space position performs unexpectedly, Eve Holding 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 Eve Holding will offset losses from the drop in Eve Holding's long position.

The idea behind Astra Space and Eve Holding 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 the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.