Correlation Between Fortress Income and Astral Foods

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

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

Diversification Opportunities for Fortress Income and Astral Foods

0.59

Correlation Coefficient

Fortress Income  Astral Foods

Very weak diversification

The 3 months correlation between Fortress and Astral is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Income and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and Fortress Income 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 Fortress Income are associated (or correlated) with Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods has no effect on the direction of Fortress Income i.e., Fortress Income and Astral Foods go up and down completely randomly.

Pair Corralation between Fortress Income and Astral Foods

Assuming the 90 days trading horizon Fortress Income is expected to generate 14.75 times less return on investment than Astral Foods. But when comparing it to its historical volatility, Fortress Income is 15.09 times less risky than Astral Foods. It trades about 0.07 of its potential returns per unit of risk. Astral Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,607,033  in Astral Foods on September 29, 2024 and sell it today you would earn a total of  252,967  from holding Astral Foods or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Fortress Income  vs.  Astral Foods

Fortress Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fortress Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Astral Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astral Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astral Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fortress Income and Astral Foods

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

The idea behind Fortress Income and Astral Foods 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.