Correlation Between Astral Foods and InterContinental

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

Diversification Opportunities for Astral Foods and InterContinental

0.47

Correlation Coefficient

Astral Foods  InterContinental

Very weak diversification

The 3 months correlation between Astral and InterContinental is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Astral Foods i.e., Astral Foods and InterContinental go up and down completely randomly.

Pair Corralation between Astral Foods and InterContinental

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 1.22 times more return on investment than InterContinental. However, Astral Foods is 1.22 times more volatile than InterContinental Hotels Group. It trades about 0.14 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.08 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 Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Astral Foods Limited  vs.  InterContinental Hotels Group

Astral Foods Limited

Risk-Adjusted Performance

3 of 100

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.

InterContinental Hotels

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, InterContinental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and InterContinental

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

The idea behind Astral Foods Limited and InterContinental Hotels Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.