Correlation Between Astar and AB SKF

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

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

Diversification Opportunities for Astar and AB SKF

-0.7

Correlation Coefficient

Astar  AB SKF

Excellent diversification

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

Pair Corralation between Astar and AB SKF

Assuming the 90 days trading horizon Astar is expected to under-perform the AB SKF. In addition to that, Astar is 2.26 times more volatile than AB SKF. It trades about -0.15 of its total potential returns per unit of risk. AB SKF is currently generating about 0.12 per unit of volatility. If you would invest  1,782  in AB SKF on December 20, 2024 and sell it today you would earn a total of  283.00  from holding AB SKF or generate 15.88% return on investment over 90 days.

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

Astar  vs.  AB SKF

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.

AB SKF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB SKF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, AB SKF reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and AB SKF

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

The idea behind Astar and AB SKF 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.