Correlation Between Astral Foods and Lamar Advertising

Can any of the company-specific risk be diversified away by investing in both Astral Foods and Lamar Advertising 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 Astral Foods and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astral Foods Limited and Lamar Advertising, you can compare the effects of market volatilities on Astral Foods and Lamar Advertising 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 Astral Foods with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Lamar Advertising.

Diversification Opportunities for Astral Foods and Lamar Advertising

0.07

Correlation Coefficient

Astral Foods  Lamar Advertising

Significant diversification

The 3 months correlation between Astral and Lamar is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Astral Foods 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 Astral Foods Limited are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Astral Foods i.e., Astral Foods and Lamar Advertising go up and down completely randomly.

Pair Corralation between Astral Foods and Lamar Advertising

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 10.09 times more return on investment than Lamar Advertising. However, Astral Foods is 10.09 times more volatile than Lamar Advertising. It trades about 0.11 of its potential returns per unit of risk. Lamar Advertising is currently generating about -0.1 per unit of risk. If you would invest  399.00  in Astral Foods Limited on December 21, 2024 and sell it today you would earn a total of  376.00  from holding Astral Foods Limited or generate 94.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Astral Foods Limited  vs.  Lamar Advertising

Astral Foods Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Astral Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lamar Advertising

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Astral Foods and Lamar Advertising

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

The idea behind Astral Foods Limited and Lamar Advertising 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.