Correlation Between Astar and Ledyard Financial

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

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

Diversification Opportunities for Astar and Ledyard Financial

0.43

Correlation Coefficient

Astar  Ledyard Financial

Very weak diversification

The 3 months correlation between Astar and Ledyard is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Ledyard Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledyard Financial 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 Ledyard Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledyard Financial has no effect on the direction of Astar i.e., Astar and Ledyard Financial go up and down completely randomly.

Pair Corralation between Astar and Ledyard Financial

Assuming the 90 days trading horizon Astar is expected to under-perform the Ledyard Financial. In addition to that, Astar is 7.97 times more volatile than Ledyard Financial Group. It trades about -0.15 of its total potential returns per unit of risk. Ledyard Financial Group is currently generating about -0.01 per unit of volatility. If you would invest  1,500  in Ledyard Financial Group on October 11, 2024 and sell it today you would lose (3.00) from holding Ledyard Financial Group or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Astar  vs.  Ledyard Financial Group

Astar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ledyard Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ledyard Financial Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Ledyard Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Astar and Ledyard Financial

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

The idea behind Astar and Ledyard Financial Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.