Correlation Between Astral Foods and Tsogo Sun

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

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

Diversification Opportunities for Astral Foods and Tsogo Sun

-0.57

Correlation Coefficient

Astral Foods  Tsogo Sun

Excellent diversification

The 3 months correlation between Astral and Tsogo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and Tsogo Sun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsogo Sun 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 Tsogo Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsogo Sun has no effect on the direction of Astral Foods i.e., Astral Foods and Tsogo Sun go up and down completely randomly.

Pair Corralation between Astral Foods and Tsogo Sun

Assuming the 90 days trading horizon Astral Foods is expected to generate 0.5 times more return on investment than Tsogo Sun. However, Astral Foods is 2.01 times less risky than Tsogo Sun. It trades about 0.0 of its potential returns per unit of risk. Tsogo Sun is currently generating about -0.28 per unit of risk. If you would invest  1,899,600  in Astral Foods on September 27, 2024 and sell it today you would lose (3,600) from holding Astral Foods or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astral Foods  vs.  Tsogo Sun

Astral Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astral Foods has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Tsogo Sun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsogo Sun 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.

Pair Trading with Astral Foods and Tsogo Sun

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

The idea behind Astral Foods and Tsogo Sun 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.