Correlation Between Master Drilling and Astral Foods

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

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

Diversification Opportunities for Master Drilling and Astral Foods

-0.26

Correlation Coefficient

Master Drilling  Astral Foods

Very good diversification

The 3 months correlation between Master and Astral is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Master Drilling Group and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and Master Drilling 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 Master Drilling Group 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 Master Drilling i.e., Master Drilling and Astral Foods go up and down completely randomly.

Pair Corralation between Master Drilling and Astral Foods

Assuming the 90 days trading horizon Master Drilling is expected to generate 198.53 times less return on investment than Astral Foods. But when comparing it to its historical volatility, Master Drilling Group is 33.91 times less risky than Astral Foods. It trades about 0.01 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  1,581,669  in Astral Foods on September 16, 2024 and sell it today you would earn a total of  320,031  from holding Astral Foods or generate 20.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Master Drilling Group  vs.  Astral Foods

Master Drilling Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Master Drilling Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Master Drilling is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Astral Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Astral Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Master Drilling and Astral Foods

The main advantage of trading using opposite Master Drilling and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Master Drilling 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 Master Drilling Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.