Correlation Between Astral Foods and SPAR

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

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

Diversification Opportunities for Astral Foods and SPAR

0.88

Correlation Coefficient

Astral Foods  SPAR

Very poor diversification

The 3 months correlation between Astral and SPAR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Astral Foods i.e., Astral Foods and SPAR go up and down completely randomly.

Pair Corralation between Astral Foods and SPAR

Assuming the 90 days trading horizon Astral Foods is expected to generate 1.24 times more return on investment than SPAR. However, Astral Foods is 1.24 times more volatile than SPAR Group. It trades about -0.2 of its potential returns per unit of risk. SPAR Group is currently generating about -0.31 per unit of risk. If you would invest  1,860,000  in Astral Foods on October 26, 2024 and sell it today you would lose (91,400) from holding Astral Foods or give up 4.91% of portfolio value over 90 days.

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

Astral Foods  vs.  SPAR Group

Astral Foods

Risk-Adjusted Performance

2 of 100

Insignificant

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.

SPAR Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SPAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Astral Foods and SPAR

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

The idea behind Astral Foods and SPAR Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.