Correlation Between ASTRA INTERNATIONAL and Canadian Utilities

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

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

Diversification Opportunities for ASTRA INTERNATIONAL and Canadian Utilities

0.51

Correlation Coefficient

ASTRA INTERNATIONAL  Canadian Utilities

Very weak diversification

The 3 months correlation between ASTRA and Canadian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ASTRA INTERNATIONAL and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of ASTRA INTERNATIONAL i.e., ASTRA INTERNATIONAL and Canadian Utilities go up and down completely randomly.

Pair Corralation between ASTRA INTERNATIONAL and Canadian Utilities

Assuming the 90 days trading horizon ASTRA INTERNATIONAL is expected to generate 1.92 times more return on investment than Canadian Utilities. However, ASTRA INTERNATIONAL is 1.92 times more volatile than Canadian Utilities Limited. It trades about 0.01 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.07 per unit of risk. If you would invest  28.00  in ASTRA INTERNATIONAL on October 21, 2024 and sell it today you would earn a total of  0.00  from holding ASTRA INTERNATIONAL or generate 0.0% return on investment over 90 days.

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

ASTRA INTERNATIONAL  vs.  Canadian Utilities Limited

ASTRA INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ASTRA INTERNATIONAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Canadian Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASTRA INTERNATIONAL and Canadian Utilities

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

The idea behind ASTRA INTERNATIONAL and Canadian Utilities Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.