Correlation Between Astral Foods and Insteel Industries

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

Diversification Opportunities for Astral Foods and Insteel Industries

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Astral and Insteel is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Astral Foods i.e., Astral Foods and Insteel Industries go up and down completely randomly.

Pair Corralation between Astral Foods and Insteel Industries

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 1.28 times more return on investment than Insteel Industries. However, Astral Foods is 1.28 times more volatile than Insteel Industries. It trades about 0.14 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.05 per unit of risk. If you would invest  905.00  in Astral Foods Limited on September 22, 2024 and sell it today you would earn a total of  50.00  from holding Astral Foods Limited or generate 5.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Astral Foods Limited  vs.  Insteel Industries

 Performance 
       Timeline  
Astral Foods Limited 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 3 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.
Insteel Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insteel Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Astral Foods and Insteel Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astral Foods and Insteel Industries

The main advantage of trading using opposite Astral Foods and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.
The idea behind Astral Foods Limited and Insteel Industries 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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