Correlation Between Astar and Smart Concrete

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

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

Diversification Opportunities for Astar and Smart Concrete

-0.36

Correlation Coefficient

Astar  Smart Concrete

Very good diversification

The 3 months correlation between Astar and Smart is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public 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 Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of Astar i.e., Astar and Smart Concrete go up and down completely randomly.

Pair Corralation between Astar and Smart Concrete

Assuming the 90 days trading horizon Astar is expected to generate 4.44 times more return on investment than Smart Concrete. However, Astar is 4.44 times more volatile than Smart Concrete Public. It trades about -0.01 of its potential returns per unit of risk. Smart Concrete Public is currently generating about -0.05 per unit of risk. If you would invest  6.98  in Astar on October 9, 2024 and sell it today you would lose (0.25) from holding Astar or give up 3.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Astar  vs.  Smart Concrete Public

Astar

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Smart Concrete Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Concrete Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Smart Concrete is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Smart Concrete

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

The idea behind Astar and Smart Concrete Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.