Correlation Between Astral Foods and Thyssenkrupp

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

Diversification Opportunities for Astral Foods and Thyssenkrupp

0.34

Correlation Coefficient

Astral Foods  Thyssenkrupp

Weak diversification

The 3 months correlation between Astral and Thyssenkrupp is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Astral Foods i.e., Astral Foods and Thyssenkrupp go up and down completely randomly.

Pair Corralation between Astral Foods and Thyssenkrupp

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 16.13 times more return on investment than Thyssenkrupp. However, Astral Foods is 16.13 times more volatile than thyssenkrupp AG. It trades about 0.24 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.18 per unit of risk. If you would invest  399.00  in Astral Foods Limited on October 23, 2024 and sell it today you would earn a total of  481.00  from holding Astral Foods Limited or generate 120.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Astral Foods Limited  vs.  thyssenkrupp AG

Astral Foods Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Astral Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

thyssenkrupp AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Thyssenkrupp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and Thyssenkrupp

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

The idea behind Astral Foods Limited and thyssenkrupp AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.