Correlation Between BG Foods and ASTRA GRAPHIA

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

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

Diversification Opportunities for BG Foods and ASTRA GRAPHIA

0.52

Correlation Coefficient

BG Foods  ASTRA GRAPHIA

Very weak diversification

The 3 months correlation between DHR and ASTRA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and ASTRA GRAPHIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA GRAPHIA and BG Foods 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 BG Foods are associated (or correlated) with ASTRA GRAPHIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA GRAPHIA has no effect on the direction of BG Foods i.e., BG Foods and ASTRA GRAPHIA go up and down completely randomly.

Pair Corralation between BG Foods and ASTRA GRAPHIA

Assuming the 90 days trading horizon BG Foods is expected to under-perform the ASTRA GRAPHIA. In addition to that, BG Foods is 2.04 times more volatile than ASTRA GRAPHIA. It trades about -0.07 of its total potential returns per unit of risk. ASTRA GRAPHIA is currently generating about -0.03 per unit of volatility. If you would invest  4.10  in ASTRA GRAPHIA on October 25, 2024 and sell it today you would lose (0.15) from holding ASTRA GRAPHIA or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BG Foods  vs.  ASTRA GRAPHIA

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ASTRA GRAPHIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA GRAPHIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ASTRA GRAPHIA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BG Foods and ASTRA GRAPHIA

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

The idea behind BG Foods and ASTRA GRAPHIA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.