Correlation Between Astral Foods and Capitec Bank

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

By analyzing existing cross correlation between Astral Foods and Capitec Bank Holdings, you can compare the effects of market volatilities on Astral Foods and Capitec Bank 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 Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Capitec Bank.

Diversification Opportunities for Astral Foods and Capitec Bank

0.18

Correlation Coefficient

Astral Foods  Capitec Bank

Average diversification

The 3 months correlation between Astral and Capitec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings 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 are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Astral Foods i.e., Astral Foods and Capitec Bank go up and down completely randomly.

Pair Corralation between Astral Foods and Capitec Bank

Assuming the 90 days trading horizon Astral Foods is expected to generate 47.07 times more return on investment than Capitec Bank. However, Astral Foods is 47.07 times more volatile than Capitec Bank Holdings. It trades about 0.07 of its potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.01 per unit of risk. If you would invest  1,593,300  in Astral Foods on October 5, 2024 and sell it today you would earn a total of  250,200  from holding Astral Foods or generate 15.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.37%
Values	Daily Returns

Astral Foods  vs.  Capitec Bank Holdings

Astral Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Astral Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Capitec Bank Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitec Bank Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capitec Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astral Foods and Capitec Bank

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

The idea behind Astral Foods and Capitec Bank Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.