Correlation Between Astral Foods and Tianjin Capital

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

Diversification Opportunities for Astral Foods and Tianjin Capital

-0.21

Correlation Coefficient

Astral Foods  Tianjin Capital

Very good diversification

The 3 months correlation between Astral and Tianjin is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Astral Foods i.e., Astral Foods and Tianjin Capital go up and down completely randomly.

Pair Corralation between Astral Foods and Tianjin Capital

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 11.79 times more return on investment than Tianjin Capital. However, Astral Foods is 11.79 times more volatile than Tianjin Capital Environmental. It trades about 0.11 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.02 per unit of risk. If you would invest  399.00  in Astral Foods Limited on December 21, 2024 and sell it today you would earn a total of  386.00  from holding Astral Foods Limited or generate 96.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Astral Foods Limited  vs.  Tianjin Capital Environmental

Astral Foods Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Astral Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Capital Envi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Astral Foods and Tianjin Capital

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

The idea behind Astral Foods Limited and Tianjin Capital Environmental 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.