Correlation Between Terran Orbital and Astra Space

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

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

Diversification Opportunities for Terran Orbital and Astra Space

0.69

Correlation Coefficient

Terran Orbital  Astra Space

Poor diversification

The 3 months correlation between Terran and Astra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Terran Orbital Corp and Astra Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Space and Terran Orbital 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 Terran Orbital Corp are associated (or correlated) with Astra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Space has no effect on the direction of Terran Orbital i.e., Terran Orbital and Astra Space go up and down completely randomly.

Pair Corralation between Terran Orbital and Astra Space

Given the investment horizon of 90 days Terran Orbital Corp is expected to under-perform the Astra Space. In addition to that, Terran Orbital is 2.04 times more volatile than Astra Space. It trades about -0.15 of its total potential returns per unit of risk. Astra Space is currently generating about 0.0 per unit of volatility. If you would invest  56.00  in Astra Space on July 12, 2024 and sell it today you would lose (2.00) from holding Astra Space or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	54.4%
Values	Daily Returns

Terran Orbital Corp  vs.  Astra Space

Terran Orbital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terran Orbital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Terran Orbital and Astra Space

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

The idea behind Terran Orbital Corp and Astra Space 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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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.