Correlation Between Astral Foods and VIVA WINE

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

Diversification Opportunities for Astral Foods and VIVA WINE

-0.31

Correlation Coefficient

Astral Foods  VIVA WINE

Very good diversification

The 3 months correlation between Astral and VIVA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP 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 VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of Astral Foods i.e., Astral Foods and VIVA WINE go up and down completely randomly.

Pair Corralation between Astral Foods and VIVA WINE

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 1.88 times more return on investment than VIVA WINE. However, Astral Foods is 1.88 times more volatile than VIVA WINE GROUP. It trades about 0.03 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about 0.06 per unit of risk. If you would invest  870.00  in Astral Foods Limited on September 27, 2024 and sell it today you would earn a total of  90.00  from holding Astral Foods Limited or generate 10.34% return on investment over 90 days.

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

Astral Foods Limited  vs.  VIVA WINE GROUP

Astral Foods Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 1 (%) 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.

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Astral Foods and VIVA WINE

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

The idea behind Astral Foods Limited and VIVA WINE 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.