Correlation Between Astar and FIRST MUTUAL

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

By analyzing existing cross correlation between Astar and FIRST MUTUAL PROPERTIES, you can compare the effects of market volatilities on Astar and FIRST MUTUAL 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 FIRST MUTUAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and FIRST MUTUAL.

Diversification Opportunities for Astar and FIRST MUTUAL

0.7

Correlation Coefficient

Astar  FIRST MUTUAL

Poor diversification

The 3 months correlation between Astar and FIRST is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Astar and FIRST MUTUAL PROPERTIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL PROPERTIES 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 FIRST MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL PROPERTIES has no effect on the direction of Astar i.e., Astar and FIRST MUTUAL go up and down completely randomly.

Pair Corralation between Astar and FIRST MUTUAL

Assuming the 90 days trading horizon Astar is expected to under-perform the FIRST MUTUAL. In addition to that, Astar is 2.4 times more volatile than FIRST MUTUAL PROPERTIES. It trades about -0.18 of its total potential returns per unit of risk. FIRST MUTUAL PROPERTIES is currently generating about -0.2 per unit of volatility. If you would invest  12,310  in FIRST MUTUAL PROPERTIES on December 21, 2024 and sell it today you would lose (2,815) from holding FIRST MUTUAL PROPERTIES or give up 22.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Astar  vs.  FIRST MUTUAL PROPERTIES

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.

FIRST MUTUAL PROPERTIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days FIRST MUTUAL PROPERTIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Astar and FIRST MUTUAL

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

The idea behind Astar and FIRST MUTUAL PROPERTIES 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.