Correlation Between Astar and BGF Latin

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

By analyzing existing cross correlation between Astar and BGF Latin American, you can compare the effects of market volatilities on Astar and BGF Latin 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 Astar with a short position of BGF Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and BGF Latin.

Diversification Opportunities for Astar and BGF Latin

-0.57

Correlation Coefficient

Astar  BGF Latin

Excellent diversification

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

Pair Corralation between Astar and BGF Latin

Assuming the 90 days trading horizon Astar is expected to under-perform the BGF Latin. In addition to that, Astar is 3.19 times more volatile than BGF Latin American. It trades about -0.18 of its total potential returns per unit of risk. BGF Latin American is currently generating about 0.1 per unit of volatility. If you would invest  5,178  in BGF Latin American on December 21, 2024 and sell it today you would earn a total of  482.00  from holding BGF Latin American or generate 9.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Astar  vs.  BGF Latin American

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar 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 Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

BGF Latin American

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Latin American are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, BGF Latin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Astar and BGF Latin

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

The idea behind Astar and BGF Latin American 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.