Correlation Between Astral Foods and AOYAMA TRADING

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

Diversification Opportunities for Astral Foods and AOYAMA TRADING

0.72

Correlation Coefficient

Astral Foods  AOYAMA TRADING

Poor diversification

The 3 months correlation between Astral and AOYAMA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of Astral Foods i.e., Astral Foods and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between Astral Foods and AOYAMA TRADING

Assuming the 90 days trading horizon Astral Foods Limited is expected to under-perform the AOYAMA TRADING. In addition to that, Astral Foods is 1.13 times more volatile than AOYAMA TRADING. It trades about -0.2 of its total potential returns per unit of risk. AOYAMA TRADING is currently generating about -0.17 per unit of volatility. If you would invest  1,410  in AOYAMA TRADING on October 10, 2024 and sell it today you would lose (60.00) from holding AOYAMA TRADING or give up 4.26% of portfolio value over 90 days.

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

Astral Foods Limited  vs.  AOYAMA TRADING

Astral Foods Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Astral Foods is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AOYAMA TRADING

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and AOYAMA TRADING

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

The idea behind Astral Foods Limited and AOYAMA TRADING 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.