Correlation Between Astoria Investments and Afrimat

Can any of the company-specific risk be diversified away by investing in both Astoria Investments and Afrimat 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 Astoria Investments and Afrimat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astoria Investments and Afrimat, you can compare the effects of market volatilities on Astoria Investments and Afrimat 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 Astoria Investments with a short position of Afrimat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astoria Investments and Afrimat.

Diversification Opportunities for Astoria Investments and Afrimat

0.22

Correlation Coefficient

Astoria Investments  Afrimat

Modest diversification

The 3 months correlation between Astoria and Afrimat is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and Afrimat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afrimat and Astoria Investments 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 Astoria Investments are associated (or correlated) with Afrimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afrimat has no effect on the direction of Astoria Investments i.e., Astoria Investments and Afrimat go up and down completely randomly.

Pair Corralation between Astoria Investments and Afrimat

Assuming the 90 days trading horizon Astoria Investments is expected to under-perform the Afrimat. In addition to that, Astoria Investments is 1.34 times more volatile than Afrimat. It trades about -0.1 of its total potential returns per unit of risk. Afrimat is currently generating about 0.08 per unit of volatility. If you would invest  662,100  in Afrimat on September 14, 2024 and sell it today you would earn a total of  47,600  from holding Afrimat or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Astoria Investments  vs.  Afrimat

Astoria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Afrimat

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Afrimat are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Afrimat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Astoria Investments and Afrimat

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

The idea behind Astoria Investments and Afrimat 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.