Correlation Between Astral Foods and Harmony Gold

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

Diversification Opportunities for Astral Foods and Harmony Gold

0.03

Correlation Coefficient

Astral Foods  Harmony Gold

Significant diversification

The 3 months correlation between Astral and Harmony is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Astral Foods i.e., Astral Foods and Harmony Gold go up and down completely randomly.

Pair Corralation between Astral Foods and Harmony Gold

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 0.42 times more return on investment than Harmony Gold. However, Astral Foods Limited is 2.36 times less risky than Harmony Gold. It trades about 0.11 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.04 per unit of risk. If you would invest  845.00  in Astral Foods Limited on September 4, 2024 and sell it today you would earn a total of  95.00  from holding Astral Foods Limited or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Astral Foods Limited  vs.  Harmony Gold Mining

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.

Harmony Gold Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Astral Foods and Harmony Gold

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

The idea behind Astral Foods Limited and Harmony Gold Mining 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.