Correlation Between Astoria Investments and Truworths International

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

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

Diversification Opportunities for Astoria Investments and Truworths International

0.04

Correlation Coefficient

Astoria Investments  Truworths International

Significant diversification

The 3 months correlation between Astoria and Truworths is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and Truworths International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truworths International 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 Truworths International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truworths International has no effect on the direction of Astoria Investments i.e., Astoria Investments and Truworths International go up and down completely randomly.

Pair Corralation between Astoria Investments and Truworths International

Assuming the 90 days trading horizon Astoria Investments is expected to generate 1.94 times less return on investment than Truworths International. In addition to that, Astoria Investments is 1.74 times more volatile than Truworths International. It trades about 0.01 of its total potential returns per unit of risk. Truworths International is currently generating about 0.05 per unit of volatility. If you would invest  800,000  in Truworths International on October 11, 2024 and sell it today you would earn a total of  195,900  from holding Truworths International or generate 24.49% return on investment over 90 days.

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

Astoria Investments  vs.  Truworths International

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 rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Truworths International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truworths International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Astoria Investments and Truworths International

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

The idea behind Astoria Investments and Truworths International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.