Correlation Between Astral Foods and Netcall PLC

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

Diversification Opportunities for Astral Foods and Netcall PLC

0.39

Correlation Coefficient

Astral Foods  Netcall PLC

Weak diversification

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

Pair Corralation between Astral Foods and Netcall PLC

Assuming the 90 days trading horizon Astral Foods Limited is expected to under-perform the Netcall PLC. But the stock apears to be less risky and, when comparing its historical volatility, Astral Foods Limited is 2.26 times less risky than Netcall PLC. The stock trades about -0.15 of its potential returns per unit of risk. The Netcall PLC is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Netcall PLC on October 11, 2024 and sell it today you would earn a total of  15.00  from holding Netcall PLC or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Astral Foods Limited  vs.  Netcall PLC

Astral Foods Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Netcall PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netcall PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Netcall PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and Netcall PLC

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

The idea behind Astral Foods Limited and Netcall PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.