Correlation Between Astral Foods and Lifevantage

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

Diversification Opportunities for Astral Foods and Lifevantage

0.36

Correlation Coefficient

Astral Foods  Lifevantage

Weak diversification

The 3 months correlation between Astral and Lifevantage is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Astral Foods i.e., Astral Foods and Lifevantage go up and down completely randomly.

Pair Corralation between Astral Foods and Lifevantage

Assuming the 90 days horizon Astral Foods is expected to generate 16.81 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Astral Foods Limited is 10.3 times less risky than Lifevantage. It trades about 0.13 of its potential returns per unit of risk. Lifevantage is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,294  in Lifevantage on October 24, 2024 and sell it today you would earn a total of  1,090  from holding Lifevantage or generate 84.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Astral Foods Limited  vs.  Lifevantage

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. 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.

Lifevantage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and Lifevantage

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

The idea behind Astral Foods Limited and Lifevantage 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.