Correlation Between Nabors Industries and Astral Foods

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

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

Diversification Opportunities for Nabors Industries and Astral Foods

-0.04

Correlation Coefficient

Nabors Industries  Astral Foods

Good diversification

The 3 months correlation between Nabors and Astral is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited and Nabors Industries 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 Nabors Industries 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 Limited has no effect on the direction of Nabors Industries i.e., Nabors Industries and Astral Foods go up and down completely randomly.

Pair Corralation between Nabors Industries and Astral Foods

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Astral Foods. In addition to that, Nabors Industries is 2.63 times more volatile than Astral Foods Limited. It trades about -0.04 of its total potential returns per unit of risk. Astral Foods Limited is currently generating about -0.06 per unit of volatility. If you would invest  1,124  in Astral Foods Limited on October 24, 2024 and sell it today you would lose (385.00) from holding Astral Foods Limited or give up 34.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nabors Industries  vs.  Astral Foods Limited

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Astral Foods Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Astral Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nabors Industries and Astral Foods

The main advantage of trading using opposite Nabors Industries and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nabors Industries 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 Nabors Industries and Astral Foods Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.