Correlation Between Astral Foods and Centrotec

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

Diversification Opportunities for Astral Foods and Centrotec

0.39

Correlation Coefficient

Astral Foods  Centrotec

Weak diversification

The 3 months correlation between Astral and Centrotec is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE 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 Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of Astral Foods i.e., Astral Foods and Centrotec go up and down completely randomly.

Pair Corralation between Astral Foods and Centrotec

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 1.36 times more return on investment than Centrotec. However, Astral Foods is 1.36 times more volatile than Centrotec SE. It trades about 0.11 of its potential returns per unit of risk. Centrotec SE is currently generating about 0.08 per unit of risk. If you would invest  865.00  in Astral Foods Limited on September 17, 2024 and sell it today you would earn a total of  95.00  from holding Astral Foods Limited or generate 10.98% return on investment over 90 days.

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

Astral Foods Limited  vs.  Centrotec SE

Astral Foods Limited

Risk-Adjusted Performance

8 of 100

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Centrotec SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Centrotec is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Astral Foods and Centrotec

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

The idea behind Astral Foods Limited and Centrotec SE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.