Correlation Between Astor Longshort and Frontier Mfg

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

By analyzing existing cross correlation between Astor Longshort Fund and Frontier Mfg Global, you can compare the effects of market volatilities on Astor Longshort and Frontier Mfg 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 Astor Longshort with a short position of Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astor Longshort and Frontier Mfg.

Diversification Opportunities for Astor Longshort and Frontier Mfg

0.54

Correlation Coefficient

Astor Longshort  Frontier Mfg

Very weak diversification

The 3 months correlation between Astor and Frontier is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and Frontier Mfg Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg Global and Astor Longshort 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 Astor Longshort Fund are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg Global has no effect on the direction of Astor Longshort i.e., Astor Longshort and Frontier Mfg go up and down completely randomly.

Pair Corralation between Astor Longshort and Frontier Mfg

Assuming the 90 days horizon Astor Longshort is expected to generate 1.55 times less return on investment than Frontier Mfg. But when comparing it to its historical volatility, Astor Longshort Fund is 1.76 times less risky than Frontier Mfg. It trades about 0.13 of its potential returns per unit of risk. Frontier Mfg Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,222  in Frontier Mfg Global on September 12, 2024 and sell it today you would earn a total of  353.00  from holding Frontier Mfg Global or generate 28.89% return on investment over 90 days.

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

Astor Longshort Fund  vs.  Frontier Mfg Global

Astor Longshort

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Astor Longshort Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Astor Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Frontier Mfg Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Mfg Global are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Frontier Mfg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astor Longshort and Frontier Mfg

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

The idea behind Astor Longshort Fund and Frontier Mfg Global 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.