Correlation Between Astar and Meta Platforms

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

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

Diversification Opportunities for Astar and Meta Platforms

0.26

Correlation Coefficient

Astar  Meta Platforms

Modest diversification

The 3 months correlation between Astar and Meta is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Astar i.e., Astar and Meta Platforms go up and down completely randomly.

Pair Corralation between Astar and Meta Platforms

Assuming the 90 days trading horizon Astar is expected to generate 1.01 times less return on investment than Meta Platforms. In addition to that, Astar is 3.64 times more volatile than Meta Platforms. It trades about 0.04 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.16 per unit of volatility. If you would invest  2,600  in Meta Platforms on October 11, 2024 and sell it today you would earn a total of  10,611  from holding Meta Platforms or generate 408.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.49%
Values	Daily Returns

Astar  vs.  Meta Platforms

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.

Meta Platforms

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and Meta Platforms

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

The idea behind Astar and Meta Platforms 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .