Correlation Between Newmont and Astral Foods

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

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

Diversification Opportunities for Newmont and Astral Foods

-0.32

Correlation Coefficient

Newmont  Astral Foods

Very good diversification

The 3 months correlation between Newmont and Astral is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Newmont 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 Newmont 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 Newmont 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 Newmont i.e., Newmont and Astral Foods go up and down completely randomly.

Pair Corralation between Newmont and Astral Foods

Assuming the 90 days horizon Newmont is expected to under-perform the Astral Foods. In addition to that, Newmont is 1.5 times more volatile than Astral Foods Limited. It trades about -0.01 of its total potential returns per unit of risk. Astral Foods Limited is currently generating about 0.07 per unit of volatility. If you would invest  815.00  in Astral Foods Limited on September 29, 2024 and sell it today you would earn a total of  105.00  from holding Astral Foods Limited or generate 12.88% return on investment over 90 days.

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

Newmont  vs.  Astral Foods Limited

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

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

Astral Foods Limited

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Astral Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Astral Foods 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 Newmont and Astral Foods

The main advantage of trading using opposite Newmont and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont 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 Newmont 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.