Correlation Between Astral Foods and Alliance Entertainment

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

Diversification Opportunities for Astral Foods and Alliance Entertainment

0.0

Correlation Coefficient

Astral Foods  Alliance Entertainment

Pay attention - limited upside

The 3 months correlation between Astral and Alliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment 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 Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Astral Foods i.e., Astral Foods and Alliance Entertainment go up and down completely randomly.

Pair Corralation between Astral Foods and Alliance Entertainment

If you would invest  27.00  in Alliance Entertainment Holding on October 10, 2024 and sell it today you would earn a total of  23.00  from holding Alliance Entertainment Holding or generate 85.19% return on investment over 90 days.

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

Astral Foods Limited  vs.  Alliance Entertainment Holding

Astral Foods Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alliance Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Alliance Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and Alliance Entertainment

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

The idea behind Astral Foods Limited and Alliance Entertainment Holding 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.