Correlation Between Astral Foods and BNP Paribas

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

Diversification Opportunities for Astral Foods and BNP Paribas

0.78

Correlation Coefficient

Astral Foods  BNP Paribas

Poor diversification

The 3 months correlation between Astral and BNP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Astral Foods i.e., Astral Foods and BNP Paribas go up and down completely randomly.

Pair Corralation between Astral Foods and BNP Paribas

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 8.23 times more return on investment than BNP Paribas. However, Astral Foods is 8.23 times more volatile than BNP Paribas SA. It trades about 0.09 of its potential returns per unit of risk. BNP Paribas SA is currently generating about 0.1 per unit of risk. If you would invest  353.00  in Astral Foods Limited on December 10, 2024 and sell it today you would earn a total of  427.00  from holding Astral Foods Limited or generate 120.96% return on investment over 90 days.

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

Astral Foods Limited  vs.  BNP Paribas SA

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 unfluctuating basic indicators, Astral Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BNP Paribas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and BNP Paribas

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

The idea behind Astral Foods Limited and BNP Paribas SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.