Correlation Between Big 5 and ASTRA INTERNATIONAL

Can any of the company-specific risk be diversified away by investing in both Big 5 and ASTRA INTERNATIONAL 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 Big 5 and ASTRA INTERNATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big 5 Sporting and ASTRA INTERNATIONAL, you can compare the effects of market volatilities on Big 5 and ASTRA INTERNATIONAL 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 Big 5 with a short position of ASTRA INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and ASTRA INTERNATIONAL.

Diversification Opportunities for Big 5 and ASTRA INTERNATIONAL

0.72

Correlation Coefficient

Big 5  ASTRA INTERNATIONAL

Poor diversification

The 3 months correlation between Big and ASTRA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL and Big 5 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 Big 5 Sporting are associated (or correlated) with ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of Big 5 i.e., Big 5 and ASTRA INTERNATIONAL go up and down completely randomly.

Pair Corralation between Big 5 and ASTRA INTERNATIONAL

Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the ASTRA INTERNATIONAL. In addition to that, Big 5 is 1.02 times more volatile than ASTRA INTERNATIONAL. It trades about -0.26 of its total potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about 0.02 per unit of volatility. If you would invest  29.00  in ASTRA INTERNATIONAL on December 29, 2024 and sell it today you would earn a total of  0.00  from holding ASTRA INTERNATIONAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Big 5 Sporting  vs.  ASTRA INTERNATIONAL

Big 5 Sporting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ASTRA INTERNATIONAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASTRA INTERNATIONAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ASTRA INTERNATIONAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Big 5 and ASTRA INTERNATIONAL

The main advantage of trading using opposite Big 5 and ASTRA INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL will offset losses from the drop in ASTRA INTERNATIONAL's long position.

The idea behind Big 5 Sporting and ASTRA INTERNATIONAL 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.